On Monday, Brent crude futures increased by 2.45% to $93.35 a barrel, while West Texas Intermediate futures rose by 2.8% to $89.78 per barrel. This price jump follows Israel's decision to deepen its military operations in Lebanon, which has reignited fears of conflict with Hezbollah, an Iran-backed group.
The situation is particularly concerning as it undermines recent U.S.-brokered talks aimed at extending a ceasefire between Washington and Tehran. Israeli Prime Minister Benjamin Netanyahu confirmed the military escalation, stating that he instructed the Israel Defense Forces to expand their operations in Lebanon, despite a ceasefire declared in April.
Goldman Sachs has indicated that while there are risks of rising oil prices due to potential supply disruptions in the Middle East, there are also significant downside risks stemming from weakening demand, particularly highlighted by disappointing oil retail sales data from China and Western Europe.
The bank estimates that these factors could imply a downside risk of around 2 million barrels per day to their already conservative demand forecasts for the fourth quarter of 2026