West Texas Intermediate (WTI) US Oil traded around $89.95 on Monday, marking a 1.57% increase for the day, as escalating geopolitical tensions in the Middle East drove energy prices higher [1]. The surge was triggered by renewed hostilities between Israel and Iran, with Iran-backed Houthi militias announcing attacks against Israel and imposing a ban on Israeli vessels in the Red Sea. Additionally, reciprocal strikes between Israel and Iran heightened fears of a broader regional conflict, raising concerns about potential disruptions to global energy supply, particularly through the strategic Strait of Hormuz [1].
Iran’s foreign ministry spokesperson warned that repeated ceasefire violations would further undermine the peace process with the United States, while Iran’s Parliamentary Speaker Mohammad Baqer Ghalibaf cautioned that US and allied military bases in the region could become 'legitimate targets,' intensifying market anxiety [1]. Amid these developments, OPEC+ announced a production increase of 188,000 barrels per day starting in July, though the market interpreted this move as cautious given the prevailing risks [1].
Oil prices initially surged, with WTI reaching an intraday high near $93.50, but later trimmed gains after FarsNews reported that Iran's armed forces had announced an end to military operations against Israel. The report also indicated that Tehran warned of a harsher response if Israeli attacks on Lebanon resumed, though this statement had not been confirmed by other media outlets at the time [1]. The de-escalation headlines, coupled with a call from US President Donald Trump for both sides to halt hostilities, led to a sharp retreat in WTI prices as investors reassessed the immediate risk of supply disruptions [1].
Analysts provided mixed forward-looking views. BNY’s Bob Savage highlighted that the interplay between conflict-related risks and the gradual addition of new supply would continue to influence oil prices in the near term. Danske Bank analysts noted that the recent rally reflected a reassessment of regional supply risks and suggested that hopes for a broader agreement to restore stable energy flows had diminished following the latest military exchanges. Société Générale argued that the oil market might still be underestimating underlying supply pressures, pointing to declining global inventories and suggesting that higher prices may be necessary to achieve a sustainable market balance [1].
CONCLUSION
WTI Oil experienced significant volatility as Middle East tensions initially drove prices higher, but reports of de-escalation led to a sharp pullback. While OPEC+ announced a modest production increase, analysts remain concerned about ongoing supply risks and declining inventories. The market is expected to remain sensitive to further geopolitical developments and supply signals.