Oil prices extended gains on Monday to a two-week high as efforts to end the US-Israeli war on Iran appeared to have stalled, following the drone strike on a nuclear power plant in the United Arab Emirates and ahead of expected discussions by US President Donald Trump on military options against Iran.
Brent crude futures climbed $1.44, or 1.32%, to $110.70 a barrel by 23:37 GMT after touching the highest level since May 5 earlier in the session. US West Texas Intermediate was at $107.26 a barrel, up $1.84, or 1.75%, following a rise to its highest level since May 4.
Both contracts gained more than 7% last week as hopes of a peace deal that would end ship attacks and seizures around the Strait of Hormuz dimmed. Last week’s talks between Trump and Chinese President Xi Jinping ended without an indication from the world’s top oil importer that it would help resolve the conflict.
Drone attacks on the UAE and Saudi Arabia and rhetoric from Washington and Tehran raised concerns of an escalation. Emirati officials said they were investigating the source of the strike on the Barakah nuclear power plant and that the UAE had the full right to respond to such “terrorist attacks.” Saudi Arabia, which intercepted three drones that entered from Iraqi airspace, warned it would take the necessary operational measures to respond to any attempt to violate its sovereignty.
“These drone strikes are a pointed warning — renewed U.S. or Israeli strikes on Iran could trigger more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies,” IG market analyst Tony Sycamore said.
Trump is expected to meet top national security advisers on Tuesday to discuss options for military action regarding Iran, Axios reported. The convening follows Sunday’s call between Trump and Israeli Prime Minister Benjamin Netanyahu ahead of an Israeli security cabinet meeting and the sharp Sunday sell-off in Middle East stock markets on US-Iran deal doubts.
