Oil prices surged sharply due to the deepening Israeli offensive in Lebanon

International oil prices trended sharply upward at the start of trading on Monday after Israel ordered the deployment of additional troops into Southern Lebanon and deepened its offensive against Hezbollah. The move undermined hopes for extending the fragile truce between the United States and Iran and instantly increased the geopolitical premium in the price of the commodity.

According to agency data, Brent futures rose by about 2.25% to $93.17 per barrel, and contracts for U.S. light crude increased by 2.62% to $89.65 per barrel. The jump reflects growing investor concerns that the conflict in the Middle East is moving not toward de-escalation, but toward expansion and new supply disruptions.

Israel expands operation against Hezbollah in Lebanon

According to information from the Israeli armed forces, an order was given for units to advance deeper into Southern Lebanon, with the aim of strengthening actions against the Iranian-backed organization Hezbollah. This comes despite the truce announced more than six weeks ago and following weeks of expanded ground operations.

In the recent period alone, the Israeli army has struck over 100 Hezbollah targets in southern Lebanon and the eastern Bekaa Valley. According to an analysis by Euronews, the new phase of the offensive "fuels investor fears that the broader conflict in the Middle East could escalate rather than head toward a peaceful resolution."

Hesitation in Washington: Trump leaves meeting without a decision

Oil prices also reacted to the uncertainty regarding whether President Donald Trump will approve the previously negotiated 60-day extension of the truce with Iran. According to PBS, last week, American and Iranian negotiators reached an agreement in principle to extend the pause in hostilities and start new nuclear talks.

However, on May 29, Trump left a meeting in the White House Situation Room without making a final decision. Vice President J.D. Vance commented to the media: "It's hard to say when and if the president will sign at all," adding that teams are still working on "a number of formulations" regarding nuclear issues.

Military strikes and warnings in the Persian Gulf

Market tension is also being fueled by new reports of military actions. U.S. armed forces stated that over the weekend they carried out self-defense strikes on Iranian radar systems and drone control facilities. On the Iranian side, retaliatory strikes on a U.S. airbase in Kuwait were reported earlier in the week – an action the U.S. described as a violation of the ceasefire regime.

The U.S. Central Command further warned that it is prepared to attack Iranian ships placing mines near the Strait of Hormuz – a key chokepoint for global oil supplies, where Tehran has deployed mines several times during the three-month conflict.

Market forecasts: between weak demand and the risk of shortages

Investment bank Goldman Sachs noted in an analysis Sunday evening that weak demand for oil in China and Europe creates a risk of downward adjustments to the price forecast for Brent during the fourth quarter. At the same time, the bank acknowledges that potential supply disruptions from the Middle East, especially if tensions around the Strait of Hormuz escalate, could push prices upward again.

For the moment, the market remains torn between fundamentals – weaker demand in some key economies – and geopolitical risk, which adds a premium of several dollars to every barrel. Israel's new actions in Lebanon and the ambiguity surrounding the U.S.-Iran truce are tipping the scales toward a scenario of higher prices, at least until it becomes clear whether diplomacy can restore hopes for de-escalation.