Oil prices increased by more than 3% on 1 June following a weekend of intensified military activity between the US and Iran, and an order by Israel for troops to enter further into Lebanon.
As of 07:01 GMT, US crude futures had gained $2.88, or 3.3%, to reach $90.24 per barrel (bbl), while Brent futures had increased by $2.78, or 3.05%, to $93.90/bbl, according to Reuters.
The market reaction followed recent strikes by both the US and Iran.
The US stated on Sunday that it had undertaken "self-defence strikes" against radar and drone control installations in Iran’s Goruk and Qeshm Island. These operations, according to the US, were a response to what it described as "aggressive" actions by Tehran.
Iran’s Islamic Revolutionary Guard Corps announced on Monday that its aerospace unit had targeted an air base, citing US involvement in an attack on a telecommunications tower on Sirik Island.
The escalation came after US-hosted peace talks between Israel and Lebanon on Friday failed to deliver a breakthrough.
Hopes for an extension of the existing US-Iran ceasefire, which had previously contributed to a drop of 1.8% in Brent and 1.7% in WTI prices on Friday, have now faded.
US President Donald Trump indicated on Friday that a decision on a proposed deal to prolong the ceasefire, first declared in early April, could be announced soon.
The arrangement aims to allow additional negotiations for a permanent resolution to both the conflict and disputes related to Iran’s nuclear programme.
Iran maintains that Hezbollah must be involved in any agreement, while the US has proposed a "gradual de-escalation" plan.
A US official stated on Sunday that this could involve Hezbollah ceasing attacks on Israel in exchange for Israel not escalating its actions in Beirut.
Additional supply concerns have been raised over the possible presence of mines in the Strait of Hormuz, a key route for international oil and gas shipments. Analyst Tony Sycamore at IG noted that such activity could delay the reopening of the waterway and prolong disruptions to the oil market.
Meanwhile, weekend economic data from China signalled stalling factory activity, adding to concerns about global demand. Goldman Sachs has stated that weak oil consumption in China and Europe remains a risk to its forecasts, although supply disruptions in the Middle East could support oil prices.
In Australia, Energy Minister Chris Bowen said on Saturday that the country would continue to release petrol and diesel from domestic reserves by extending a 20% temporary reduction in fuel companies' minimum stockholding obligations until September.
The policy, which frees up to 762 million litres of fuel, was first introduced in March to address shortages since the conflict between Iran, the US and Israel intensified in February. As of Saturday, Australia's fuel reserves stood at 48 days of petrol, 36 days of diesel and 30 days of jet fuel. Bowen described these reserves as "remarkable in the face of very tight international supply chains".
Last month, Australian Prime Minister Anthony Albanese announced a package of more than A$10bn ($7.2bn) to expand domestic fuel stockpiles and establish a government-owned reserve.
