Oil prices rise over 2% after Israel expands military operations in Lebanon

Global oil prices rose over 2% on Monday (1 June 2026) after Israel ordered its forces to expand military operations in Lebanon. The move heightened market concerns over potential disruptions to energy supplies from the Middle East. According to CNBC, global benchmark Brent crude rose 2.45% to $93.35 per barrel, while West Texas Intermediate (WTI) crude climbed 2.8% to $89.78 per barrel. The developments also dampened market optimism regarding a possible extension of the ceasefire between the United States and Iran. Previously, the two nations were seen as nearing an extended ceasefire agreement that could help ease regional tensions. The latest escalation came just days after US-mediated talks between Israel and Lebanon concluded in Washington on Friday (29 May 2026). These developments reduced market confidence that the US and Iran were close to extending their ceasefire agreement. The order was issued despite both parties having agreed to a ceasefire announced in April. Amid rising geopolitical uncertainty, Goldman Sachs noted that oil price prospects for the rest of the year still face two-sided risks. The investment bank maintained its Q4 2026 Brent crude price forecast at $90 per barrel and WTI at $83 per barrel. However, Goldman warned that prolonged supply disruptions from the Middle East could push oil prices higher than expected. Goldman Sachs highlighted that April retail fuel sales data in China and Western Europe indicated weakening energy demand. This is expected to create a demand shortfall risk of around 2 million barrels per day compared to previous projections. Nevertheless, markets are currently focused on Middle East geopolitical developments that could affect global oil supply flows and drive short-term energy price volatility.