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As Israel intensifies its incursion in Lebanon, oil prices are up more than 2%.

Early trading on Monday saw oil prices rise by more than 2% after Israel ordered troops into Lebanon to continue the fight against the Iranian-backed Hezbollah militants, despite the ceasefire that was announced a little over six weeks ago. As of 1112 GMT, U.S. crude futures rose $2.17 (2.48%) to $89.53 per barrel. Brent futures rose by $1.93, or 2.12%, to $93.05 per barrel.

Brent and WTI settled down 1.8% and 1.7% respectively on Friday as a result of the increased fighting. This was just a few days after the U.S. hosted Israeli and Lebanon peace talks at Washington.

Israel-Lebanon war is the largest spillover from the Iran conflict. Hezbollah started firing rockets into Israel on March 2, to support its Iranian ally.

Both sides agreed to a ceasefire mid-April, but they have continued to exchange fire.

Donald Trump, the U.S. president, said Friday he will soon "decide" on a proposal to extend the ceasefire announced with Iran in early April. This would give negotiators time to "seek an end to the conflict permanently and find a resolution to the dispute over Iran’s nuclear program." Israel is a key player in any deal. Iran has said that Hezbollah should be included.

Tony Sycamore, IG's analyst, said that concerns about mines are growing in the Strait of Hormuz - a key shipping lane for oil and gas - in a?note. This could delay the reopening of the strait, and cause the oil market to receive relief more slowly even after the reopening.

"Even if an agreement is reached, there won't be a flood in supply," Sycamore stated.

Axios?reporter stated on X on Friday, that Iran dropped more mines earlier in the week. This was shortly after U.S. Defence Secretary Pete Hegseth?said that laying more mines would violate?the ceasefire.

Hormuz is the conduit for a fifth or more of global oil and natural gas flows. Iran has closed it effectively?since U.S.

The weekend's?weak economic data from China, which showed stagnant factory activity, was overshadowed by concerns over supply. The stalling of factory activity and a decline in exports have added to the concerns that China's economy is losing its momentum.

(source: Reuters)