US and Israeli forces kept up attacks on Iran on Monday as Tehran and its allies answered with missile and drone fire across the region, deepening fears of a longer conflict with no clear path to a ceasefire and pushing oil prices sharply higher again. Israeli strikes hit military and infrastructure targets around Tehran, while Washington continued moving forces into the region as President Donald Trump mixed warnings of further action with suggestions that diplomacy was still possible.
The military exchanges came after another weekend of widening hostilities that stretched from Iran and Israel to parts of the Gulf and Yemen. Gulf states reported fresh strikes and alerts overnight, while Israeli officials said operations against Iranian military targets were continuing. Tehran, for its part, signalled defiance rather than retreat, accusing Washington of preparing for a broader campaign and vowing to respond to what it sees as a combined US-Israeli assault on the Islamic Republic.
Markets reacted swiftly. Brent crude climbed toward $115 a barrel and US crude rose above $100, leaving oil on course for one of its strongest monthly surges on record as traders priced in the risk of prolonged disruption to Gulf energy flows. Investors have become increasingly sceptical that diplomatic contacts alone can calm the situation, particularly with the Strait of Hormuz still central to the crisis and shipping routes across the Gulf, Red Sea and Bab el-Mandeb under pressure.
That energy shock is now moving beyond commodity desks into the wider economy. Analysts warn that any further hit to export terminals, LNG infrastructure or desalination and power facilities in the Gulf could sharpen inflation pressures already building in major import markets across Asia and Europe. The disruption has also widened concern over aviation fuel, petrochemicals and fertiliser supply, turning what began as a military confrontation into a broader economic threat with global reach.
At the centre of the latest escalation is a hardening mismatch between battlefield aims and diplomatic messaging. Trump said contacts with Iran were continuing and suggested an agreement could come quickly, yet he also raised the possibility of the United States taking control of Iran’s Kharg Island oil export hub, one of the country’s most critical energy assets. That combination of coercive language and open-ended troop deployments has fed uncertainty rather than confidence, especially as Tehran has rejected Washington’s ceasefire terms and advanced counter-demands of its own.
Israel, meanwhile, appears intent on sustaining pressure on Iranian command, logistics and strategic infrastructure. Its operations on Monday followed earlier attacks that caused power outages in and around Tehran, according to reports cited by major agencies, and came as fires were also reported near key industrial sites in Israel after Iranian missile attacks. The expanding exchange has underlined how both sides retain the capacity to inflict damage well beyond frontline military positions, raising the risk of miscalculation around civilian and economic infrastructure.
For Gulf Arab states, the crisis has become both a security emergency and an economic balancing act. Officials from the region have condemned Iranian strikes on energy and civilian facilities and warned international bodies that such attacks pose a direct threat to regional stability. At the same time, producers such as Saudi Arabia have tried to keep exports moving through alternative routes, including Red Sea outlets, in an effort to reassure customers and prevent a deeper supply panic.
Those mitigation efforts have only partly calmed nerves because the scale of possible disruption remains too large for rerouting alone to solve. Reuters reported that roughly 12 million barrels per day could remain unavailable under a severe scenario, a supply loss large enough to test strategic reserves and reshape trade patterns if sustained. That has kept attention fixed on whether the fighting will stay confined to missile and air campaigns or tip into a more direct confrontation involving key energy nodes or ground operations.
Diplomatic channels are still active, with Pakistan preparing talks and other regional actors pressing for de-escalation, but the political signals remain mixed. Egypt’s President Abdel Fattah al-Sisi warned that oil could rise above $200 a barrel if the war intensifies, while Gulf officials used international forums to argue that continued attacks on infrastructure challenge both international law and global energy security. Those statements reflect a wider concern that even if the conflict stops short of all-out regional war, its commercial and strategic aftershocks may already be remaking calculations from shipping lanes to central banks.
The military exchanges came after another weekend of widening hostilities that stretched from Iran and Israel to parts of the Gulf and Yemen. Gulf states reported fresh strikes and alerts overnight, while Israeli officials said operations against Iranian military targets were continuing. Tehran, for its part, signalled defiance rather than retreat, accusing Washington of preparing for a broader campaign and vowing to respond to what it sees as a combined US-Israeli assault on the Islamic Republic.
Markets reacted swiftly. Brent crude climbed toward $115 a barrel and US crude rose above $100, leaving oil on course for one of its strongest monthly surges on record as traders priced in the risk of prolonged disruption to Gulf energy flows. Investors have become increasingly sceptical that diplomatic contacts alone can calm the situation, particularly with the Strait of Hormuz still central to the crisis and shipping routes across the Gulf, Red Sea and Bab el-Mandeb under pressure.
That energy shock is now moving beyond commodity desks into the wider economy. Analysts warn that any further hit to export terminals, LNG infrastructure or desalination and power facilities in the Gulf could sharpen inflation pressures already building in major import markets across Asia and Europe. The disruption has also widened concern over aviation fuel, petrochemicals and fertiliser supply, turning what began as a military confrontation into a broader economic threat with global reach.
At the centre of the latest escalation is a hardening mismatch between battlefield aims and diplomatic messaging. Trump said contacts with Iran were continuing and suggested an agreement could come quickly, yet he also raised the possibility of the United States taking control of Iran’s Kharg Island oil export hub, one of the country’s most critical energy assets. That combination of coercive language and open-ended troop deployments has fed uncertainty rather than confidence, especially as Tehran has rejected Washington’s ceasefire terms and advanced counter-demands of its own.
Israel, meanwhile, appears intent on sustaining pressure on Iranian command, logistics and strategic infrastructure. Its operations on Monday followed earlier attacks that caused power outages in and around Tehran, according to reports cited by major agencies, and came as fires were also reported near key industrial sites in Israel after Iranian missile attacks. The expanding exchange has underlined how both sides retain the capacity to inflict damage well beyond frontline military positions, raising the risk of miscalculation around civilian and economic infrastructure.
For Gulf Arab states, the crisis has become both a security emergency and an economic balancing act. Officials from the region have condemned Iranian strikes on energy and civilian facilities and warned international bodies that such attacks pose a direct threat to regional stability. At the same time, producers such as Saudi Arabia have tried to keep exports moving through alternative routes, including Red Sea outlets, in an effort to reassure customers and prevent a deeper supply panic.
Those mitigation efforts have only partly calmed nerves because the scale of possible disruption remains too large for rerouting alone to solve. Reuters reported that roughly 12 million barrels per day could remain unavailable under a severe scenario, a supply loss large enough to test strategic reserves and reshape trade patterns if sustained. That has kept attention fixed on whether the fighting will stay confined to missile and air campaigns or tip into a more direct confrontation involving key energy nodes or ground operations.
Diplomatic channels are still active, with Pakistan preparing talks and other regional actors pressing for de-escalation, but the political signals remain mixed. Egypt’s President Abdel Fattah al-Sisi warned that oil could rise above $200 a barrel if the war intensifies, while Gulf officials used international forums to argue that continued attacks on infrastructure challenge both international law and global energy security. Those statements reflect a wider concern that even if the conflict stops short of all-out regional war, its commercial and strategic aftershocks may already be remaking calculations from shipping lanes to central banks.
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