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Oil prices rose in Asian trade on Monday, extending a recent rally sparked by the intensifying conflict between Israel and Iran. The ongoing tensions have raised concerns over potential supply disruptions in the Middle East, particularly in the crucial Strait of Hormuz, a key shipping route for oil.
Brent oil futures for August rose by 0.5% to $74.59 per barrel, while West Texas Intermediate (WTI) crude futures climbed 0.6% to $71.66 per barrel as of 21:01 ET (01:01 GMT). Despite the gains, prices remained below the 4-½ month high hit on Friday, following Israeli strikes on Iran and Tehran’s retaliatory missile attacks over the weekend.
Israel-Iran Conflict Escalates, U.S. Intervention Under Scrutiny
The conflict between Israel and Iran has significantly worsened, with both nations launching a series of strikes against each other. Israel’s attack on Tehran on Friday included strikes on Iran’s nuclear facilities, while Tehran responded with missile strikes hitting major Israeli cities, including Tel Aviv.
The intensifying situation has raised concerns about further restrictions on Iranian oil exports and the potential for disruptions in the Strait of Hormuz, a vital chokepoint for oil shipments to Asia and Europe.
The focus is now on whether the U.S. will intervene in the conflict. President Donald Trump indicated that efforts were underway to negotiate a ceasefire but suggested that Israel and Iran may need to “fight it out” before any deal could be reached. Trump also warned Iran against attacking U.S. facilities in the region, further escalating geopolitical uncertainty.
The situation has also affected nuclear talks, with Iran canceling scheduled discussions with the U.S. over the weekend following Israel’s strikes, further exacerbating tensions in the region.
Central Bank Focus Amid Oil Price Rally
While the Israel-Iran conflict is expected to influence oil prices in the near term, this week also sees a barrage of central bank meetings. The Bank of Japan is scheduled to meet on Tuesday, with expectations that interest rates will remain unchanged. Traders will be looking for any new economic signals from the central bank.
The U.S. Federal Reserve will meet on Wednesday, where the focus will be on whether the central bank will signal further rate cuts, especially in light of softening inflation and a cooling economy.
Additionally, China’s central bank is expected to decide on its benchmark loan prime rate later this week, while both the Swiss National Bank and the Bank of England are also set to announce their respective interest rate decisions.
Conclusion
Oil prices continue to climb, driven by the heightened geopolitical risks stemming from the escalating Israel-Iran conflict, with concerns about supply disruptions in the Middle East. As the situation develops, attention will also be on central bank meetings throughout the week, which could further shape global economic and market conditions.
