Brent crude futures rose $1.12, or 1.5%, to $75.35 a barrel by 0019 GMT, while U.S. West Texas Intermediate crude futures gained $1.10, or 1.5%, to $74.08. They had surged more than $4 earlier in the session.
Both benchmarks settled 7% higher on Friday, having surged more than 13% during the session to their highest levels since January.
The latest exchange of strikes between Israel and Iran on Sunday resulted in civilian casualties and heightened fears of a broader regional conflict, with both militaries urging civilians on the opposing side to take precautions against further strikes.
The latest developments have stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage.
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About a fifth of the world’s total oil consumption, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel, passes through the Strait. “Buying was driven by the ongoing Israel-Iran conflict, with no resolution in sight,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. “But as seen last Friday, some selling emerged on concerns of overreaction,” he said.
While markets are watching for potential disruptions to Iranian oil production due to Israel’s strikes on energy facilities, heightened fears over a Strait of Hormuz blockade could sharply lift prices, Tazawa added.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million bpd and exports more than 2 million bpd of oil and fuel.
The spare capacity of OPEC and its allies, including Russia, to pump more oil to offset any disruption is roughly equivalent to Iran’s output, according to analysts and OPEC watchers.
U.S. President Donald Trump said on Sunday he hopes Israel and Iran can broker a ceasefire, but added that sometimes countries have to fight it out first. Trump said the U.S. will continue to support Israel but declined to say if he asked the U.S. ally to pause its strikes on Iran.
German Chancellor Friedrich Merz said he hoped a meeting of the Group of Seven leaders convening in Canada on Sunday would reach an agreement to help resolve the conflict and keep it from escalating.
Meanwhile, Iran has told mediators Qatar and Oman that it is not open to negotiating a ceasefire while under Israeli attack, an official briefed on the communications told Reuters on Sunday.
