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Oil Surges 2% as Israeli Military Escalation in Lebanon Threatens Regional Ceasefire

Crude prices climbed Monday following Israeli orders to expand military operations deeper into Lebanese territory, reigniting geopolitical tensions. Brent crude futures, the global benchmark, gained 2 percent on the development. The escalation marks a significant challenge to a ceasefire agreement established in April, with the military push occurring despite U.S.-brokered talks held in Washington on Friday aimed at extending a broader Washington-Tehran arrangement. Goldman Sachs cautioned that price forecasts for fourth-quarter 2026 face competing pressures. The bank projects Brent at $90 per barrel and WTI at $83, but warned that Middle East supply disruptions could drive prices higher, while softening demand poses downside risks. Weak retail sales data from China and Western Europe suggest approximately 2 million barrels per day in demand headwinds.