Oil prices rise as Middle East ceasefire hopes diminish

BEIJING: Oil prices increased by more than 2% on Monday after tensions in the Middle East intensified.

The rise came after Israel ordered more troops into Lebanon during clashes with Hezbollah, despite a ceasefire that was announced more than six weeks ago.

In early trading, U.S. crude oil prices rose by $2.37, reaching $89.73 per barrel. Brent crude also gained $2.16, climbing to $93.28 per barrel.

The renewed fighting has reduced hopes for a quick extension of the ceasefire agreement between the United States and Iran. Markets had earlier expected progress in negotiations, which had helped push oil prices lower at the end of last week.

The conflict between Israel and Lebanon has become one of the major regional effects of the wider Iran-related tensions. Although a ceasefire was reached in April, both sides have continued exchanging attacks.

U.S. President Donald Trump said on Friday that a decision on extending the ceasefire with Iran could be announced soon. Negotiators are working to find a long-term solution to the conflict and Iran’s nuclear dispute.

Meanwhile, concerns remain over the Strait of Hormuz, one of the world’s most important oil shipping routes. Analysts warn that the presence of mines in the area could delay the reopening of the route and keep pressure on global oil supplies.

Experts say even if a new agreement is reached, oil supplies are unlikely to increase quickly.

At the same time, weaker economic data from China raised concerns about slowing growth in the world’s second-largest economy. However, worries about oil supply disruptions had a bigger impact on the market, pushing prices higher.