Oil prices jumped in early Asian trading on Monday, with West Texas Intermediate climbing 2.88% to $89.88 per barrel and Brent crude rising 2.43% to $93.33 per barrel. The rally follows an Israeli military push deeper into Lebanon over the weekend, intensifying concerns that the regional conflict may spiral rather than move toward de-escalation.
Israeli troops crossed the Litani River and declared all areas south of the Zahrani River a combat zone, marking a significant expansion of ground operations. The move heightens the risk of supply disruptions from a region that accounts for roughly a third of global crude output, particularly if the conflict draws in major producers like Iran.
No immediate production outages have been reported, but traders are pricing in a growing risk premium as the conflict edges closer to key energy infrastructure. Analysts warn that a broader regional war could threaten Strait of Hormuz transit, a chokepoint for about 20% of the world's oil supply.
The escalation underscores the fragility of energy markets already tight on spare capacity. Any direct involvement by Iran or Hezbollah targeting Saudi or Iraqi oil fields could send prices sharply higher, according to strategists tracking the geopolitical risk curve.
Despite the rally, some analysts argue that oil supply has not been physically disrupted and that the price spike may be overblown. Demand concerns from slowing global economic growth could cap gains once the immediate shock fades, they caution.