Oil prices spiked dramatically on Monday morning, with Brent breaking above $81 and WTI rising toward $77.
While hopes of an interest rate cut had already boosted bullish sentiment in markets, it is geopolitics and supply risks that sent prices soaring on Monday morning.
A combination of Israel launching strikes against Hezbollah in Lebanon, Russia launching a major missile and drone attack on Ukraine, and the Libyan government in Benghazi declaring force majeure on all oil facilities drove oil prices up dramatically.
All three of these events are developing stories, but here’s what we know so far:
Israel and Hezbollah Exchange Fire in Major Escalation
Early on Sunday morning, Israel launched what it claims was a preemptive attack on Hezbollah in southern Lebanon. The exchange of fire between the two sides was the biggest since they fought a 34-day war in 2006.
Shortly before 5 am local time, Israel launched 100 jets to target 40 sites in Lebanon that it claimed were preparing to fire missiles and rockets at Israel.
Hezbollah then claimed to have launched more than 340 rockets at 11 military targets in Israel and the Golan Heights.
These attacks are likely to undermine ceasefire talks taking place in Egypt.
Russia Targets Ukrainian Energy Infrastructure in Huge Missile and Drone Attack
On Sunday night and early on Monday morning, Russia launched a coordinated missile and drone attack on cities and critical infrastructure across Ukraine.
President Zelensky claimed that over 100 missiles and roughly 100 attack drones were launched by Russia overnight.
Russia says it was aiming to hit critical infrastructure in the country, succeeding in causing power outages and disruptions to water supplies.
Explosions have been reported in Kyiv and other Ukrainian cities.
Libya’s Eastern Government to Halt Oil Production and Exports
On Monday morning, Libya’s government in Benghazi said that the country’s oilfields were closing down and all production and exports would stop.
While the government is not internationally recognized, it does control most of the country’s oilfields.
Tensions have been rising in Libya in recent weeks, with attempts to oust the head of the Central Bank of Libya resulting in the mobilization of armed factions of either side.
The combination of these three events has only added to bullish sentiment, and will likely drive another volatile week for oil prices as these stories develop.
By Josh Owens for Oilprice.com