Brent crude rose sharply on Monday as a renewed Israeli push into Lebanon unsettled oil traders already watching fragile US-Iran diplomacy and disrupted flows through the Strait of Hormuz.
The global benchmark climbed 2.4% to $93.35 a barrel, while West Texas Intermediate rose to $89.78, as markets reacted to Israel’s decision to expand military operations deeper into Lebanon.
The move has raised fresh doubts over whether a broader regional pause can hold, especially with Washington still trying to preserve a delicate ceasefire understanding with Iran.
For oil markets, the concern is not only Lebanon. It is whether renewed pressure on Hezbollah pulls Tehran back into a standoff that keeps one of the world’s most important energy corridors under strain.
The latest price move was triggered by Israel’s surprise order for the Israel Defense Forces to widen operations inside Lebanon, a step that came despite a ceasefire reached in April and after recent talks in Washington aimed at preventing a broader regional escalation.
Prime Minister Benjamin Netanyahu said Israel would not allow Hezbollah to rebuild its positions near the border, framing the push as a necessary security measure.
But for traders, the timing mattered as much as the statement.
The April ceasefire had helped remove some risk premium from oil prices, even though the market never fully accepted that the regional threat had passed.
That confidence is now being tested as Lebanon itself is not a major oil producer, but Hezbollah’s close ties with Iran make any escalation there more important for energy markets.
A deeper Israeli operation raises the risk of retaliation, miscalculation, or a wider breakdown in the political arrangements that have kept the US-Iran ceasefire from collapsing.
The outlook is unusually divided because both bullish and bearish forces are working at the same time.
Goldman Sachs has described the market as facing “two-sided risk” around its fourth-quarter 2026 forecasts, with Brent seen at $90 a barrel and WTI at $83.
The upside risk is clear as a prolonged Hormuz disruption, another round of regional attacks, or a failed diplomatic process could quickly lift prices again.
The downside risk is that weaker demand, especially from major consuming economies, could cap the rally if supply fears ease.
The analysts expect prices to remain in the $90–$100 range through 2026 and into 2027, even if Hormuz reopens, because the market will take time to rebuild trust in the stability of regional flows.
Citi has also warned that upside risks remain, though it sees some cushion from high inventories, Strategic Petroleum Reserve releases, weaker demand and periodic signs of de-escalation.
The bank’s key point is that Iran still controls much of the timing around any Hormuz deal, leaving traders exposed to political decisions they cannot easily price.
