By Giulia Petroni


Oil prices pared gains after Iran said it ended military operations against Israel, easing fears that the latest exchange of fire could derail regional efforts to end the war and reopen the Strait of Hormuz.

In afternoon European trading, Brent crude rose 1.8% to $94.74 a barrel, while West Texas Intermediate was up 1.5% to $91.85 a barrel following a rise of more than 4.5% earlier in the session. Both benchmarks have gained more than 60% this year but remain well below March levels, when Brent was around $120 a barrel.

Israel and Iran targeted each other in a series of strikes and counterstrikes over the weekend and into Monday for the first time since a ceasefire brokered by the U.S. went into force in April. Later on Truth Social, President Trump said both sides must immediately stop "shooting" and indicated they were seeking to agree to an immediate ceasefire.

The latest escalation has further complicated efforts to secure a broader regional peace agreement, according to market watchers. The Trump administration is pursuing a memorandum of understanding with Iran that would reopen the Strait of Hormuz, but talks remain stalled over Tehran's nuclear program and demands for access to frozen funds.

"A lasting peace agreement appears increasingly elusive," analysts at Saxo Bank said. "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."

Despite severe disruptions to Persian Gulf exports and tightening global supplies, top oil exporter Saudi Arabia cut the price of its flagship crude grade for Asian buyers by $6 a barrel, setting it at a premium of $9.50 above the regional benchmark. Saudi pricing is closely watched as a barometer of regional demand, with the latest cuts coming as China sharply reduced crude imports amid weaker refining activity and lower refined-product exports.

The kingdom and other members of OPEC+ on Sunday agreed to raise oil output again in July, marking a fourth consecutive monthly increase. The move, however, is widely seen as symbolic as the war in the Middle East continues to disrupt flows through Hormuz, while Russia's energy infrastructure has sustained significant damage.


Write to Giulia Petroni at giulia.petroni@wsj.com


(END) Dow Jones Newswires

06-08-26 0900ET