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US Oil Update: Crude Benchmarks Pare Gains as Diplomacy Spark Ceasefire Hopes

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Crude benchmarks pared early 5% gains on Monday after Iran reportedly halted its strikes against Israel, while US President Donald Trump sparked cautious market optimism by claiming both sides are actively negotiating a ceasefire.

Front-month West Texas Intermediate crude futures were up 0.6% to $91.09 per barrel, while Brent futures gained 1% to $94.03/bbl.

Earlier in the session, prices gained 5% following a series of fresh Israeli airstrikes on targets in Iran and Lebanon.

An announcement from Iran that its first wave of strikes against Israel since April had concluded calmed the market, alongside claims from Trump that both nations are pursuing an immediate ceasefire.

While Iran state media reported a halt to active hostilities, Tehran reportedly issued a stark warning of "much more severe and crushing actions" if Israel conducts further aggression, notably in southern Lebanon.

However, Trump stated via Truth Social that final peace negotiations are moving forward quickly, though he emphasized that a strict naval blockade will remain in full force until a final deal is secured.

The geopolitical standoff has kept a heavy risk premium baked into oil prices due to ongoing disruptions to crucial energy flows through the Strait of Hormuz, analysts noted.

Saxo Bank analyst said that "Despite repeated optimism from the US administration, a lasting peace agreement appears increasingly elusive."

"The near-closure of the Strait of Hormuz continues to tighten global energy markets, with several oil majors warning that the window before physical shortages begin to emerge may be measured in weeks rather than months," they added.

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