Shares of major UK-listed energy companies traded higher on Monday after oil prices surged more than 3%, driven by renewed military exchanges between the United States and Iran that reignited concerns over Middle East supply disruptions and reduced expectations for a near-term ceasefire extension.
By late morning in London, Brent crude had climbed $2.93, or 3.2%, to $94.05 per barrel, while U.S. West Texas Intermediate rose $3.36, or 3.9%, to $90.72 per barrel.
The rebound followed a difficult month for oil markets, with both benchmarks posting sharp declines in May amid hopes that diplomatic progress could lead to the reopening of the Strait of Hormuz and improve global supply conditions.
Energy Producers Benefit from Rising Crude Prices
The move higher in oil prices provided support for UK energy stocks.
Shell (LSE:SHEL) gained around 1.2%, while BP (LSE:BP.) advanced approximately 1%.
Among independent producers, Harbour Energy (LSE:HBR) and Ithaca Energy (LSE:ITH) both rose roughly 2.2% as investors responded positively to the stronger commodity backdrop.
Military Escalation Undermines De-Escalation Expectations
Tensions escalated over the weekend after the United States announced that it had carried out “self-defence strikes” against targets in Iran.
Meanwhile, Iran’s Islamic Revolutionary Guard Corps stated that its aerospace division had launched attacks against an air base allegedly used in American military operations.
The developments added fresh uncertainty to an already fragile geopolitical situation and raised concerns about the stability of energy supplies from the region.
Israel’s Lebanon Operations Add to Regional Concerns
Further pressure on market sentiment came from developments involving Israel and Hezbollah.
Israeli forces were ordered to push deeper into Lebanon as part of ongoing operations against the Iran-backed militant group, adding another layer of complexity to efforts aimed at reducing regional tensions.
The widening scope of military activity has increased doubts over the prospects for a broader de-escalation in the near future.
Ceasefire Talks Continue but Outcome Remains Unclear
Despite the latest military actions, negotiations between Washington and Tehran reportedly continued throughout the weekend.
Both sides are said to be seeking amendments to a proposed agreement that would extend the existing ceasefire and facilitate the reopening of the Strait of Hormuz.
However, the status of those discussions remains uncertain, and no breakthrough has yet been announced.
U.S. President Donald Trump stated on Friday that a decision regarding the proposed agreement was expected soon.
Strait of Hormuz Remains Central to Oil Market Concerns
The Strait of Hormuz continues to be a focal point for global energy markets.
Roughly one-quarter of the world’s seaborne oil shipments pass through the strategic waterway, which has been largely disrupted since hostilities began in late February.
Since the start of the conflict, Brent crude has risen more than 25%, reflecting ongoing concerns about the availability of global energy supplies.
Although some tankers have successfully departed the Persian Gulf in recent weeks, attacks targeting vessels transiting the strait have persisted.
Highlighting those risks, Chevron Chief Executive Mike Wirth said on Friday that the dangers facing shipping operators remain “very real.”
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