Oil prices rallied on Monday after Yemen’s Houthi movement carried out attacks on Israel over the weekend, fueling concerns that the conflict in the Middle East could expand further.
Persistent hostilities involving the U.S., Israel and Iran also signaled little sign of easing tensions. Tehran said it was ready to confront a potential U.S. ground invasion as Washington increased its military presence across the region.
Energy markets largely ignored optimistic remarks from U.S. President Donald Trump regarding ongoing negotiations with Iran.
By 00:43 ET (04:43 GMT), Brent crude futures had climbed 2.7% to $115.55 per barrel, while West Texas Intermediate crude futures rose 1.8% to $101.41 per barrel. Earlier in the session, Brent had spiked as high as $116.43 per barrel.
Houthi strikes raise risk of a new front in Iran war
The Iran-backed Houthi group in Yemen said on Sunday it had launched a volley of missiles at Israel and warned that additional attacks could follow.
Their entry into the conflict heightened fears of a broader escalation, given the group’s ability to target ships traveling through the Red Sea.
“The Houthis’ weekend involvement and the arrival of additional US troops underscore the conflict’s widening scope,” analysts at OCBC wrote in a research note.
“With little prospect of an imminent reopening of the Strait of Hormuz, our baseline remains for Brent to stay around USD100/bbl through mid‐year before gradually easing in 2H26.”
Israeli officials said their forces had struck targets in Iran’s capital over the weekend, while the United States confirmed that 3,500 troops had been deployed to the Middle East aboard the USS Tripoli.
Oil prices had already logged major gains throughout March, with Brent climbing nearly 60% since the outbreak of the U.S.-Israel conflict with Iran, which has significantly disrupted global supply flows.
Iran has effectively closed the Strait of Hormuz, a crucial shipping corridor through which about 20% of the world’s oil consumption passes.
Trump says Iran talks going well, suggests ceasefire may come soon
Oil prices continued rising even after Trump said late Sunday that negotiations with Iran were underway and that a potential deal might be close.
“I think we’ll make a deal with them, but it’s possible we won’t… I do see a deal with Iran, could be soon,” Trump told reporters aboard Air Force One.
The president did not offer a clear timetable for a possible agreement, but described Iran’s new leadership as “very reasonable.”
Trump also claimed that Iran had allowed 20 oil tankers to transit the Strait of Hormuz as a concession to Washington. Reports over the weekend indicated that 20 Pakistan-flagged oil tankers were permitted to pass through the strait.
Pakistan said it would be willing to host talks between the United States and Iran after Washington proposed a ceasefire and urged negotiations.
However, Iranian officials have largely dismissed the possibility of direct talks with the United States and over the weekend accused Washington of secretly preparing a ground invasion.
Separately, Trump told the Financial Times that he would consider taking control of Iran’s oil resources, while a Wall Street Journal report said the U.S. was weighing the possibility of seizing Iran’s uranium. Both scenarios could involve American troops entering Iran and would represent a major escalation in the conflict.
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