Oil prices climbed sharply on Monday after Israel ordered its military to advance further into Lebanon, raising concerns that renewed clashes with Hezbollah could jeopardize the fragile ceasefire between Washington and Tehran [1]. Brent crude futures, the global benchmark, surged 2.45% to $93.35 per barrel, while West Texas Intermediate (WTI) futures rose 2.8% to $89.78 per barrel [1].
The escalation followed U.S.-brokered talks between Israel and Lebanon in Washington on Friday, which had previously fueled hopes for an extension of the ceasefire arrangement between Washington and Tehran [1]. However, the latest military orders from Israeli Prime Minister Benjamin Netanyahu, who stated, "Together with Defense Minister Yisrael Katz, I instructed the IDF to expand the maneuver in Lebanon," have rattled those hopes, despite a ceasefire declared in April [1].
Goldman Sachs commented that risks to its fourth-quarter 2026 Brent and WTI forecasts of $90 and $83 per barrel, respectively, remain "two-sided" [1]. The bank warned that persistent Middle East supply disruptions could push prices higher, but also noted that weakening demand poses meaningful downside risks [1]. Specifically, Goldman estimated that weak April oil retail sales data from China and Western Europe together implied around 2 million barrels per day of downside risk to its already subdued demand forecasts [1].
CONCLUSION
The expansion of Israel's military operations in Lebanon has reignited fears of supply disruptions in the oil market, driving prices higher. While geopolitical tensions are pushing prices up, analysts caution that weak demand, particularly from China and Western Europe, could offset these gains. The market remains highly sensitive to both supply risks and demand uncertainties.