Both benchmarks ended last week down about 7%. They fell 2% on Friday after stronger-than-expected U.S. jobs data suggested interest rate cuts could be further out than expected, and on progress in ceasefire negotiations between Israel and Hamas.

However, investors remained wary of any escalation in the Middle East conflict, after the U.S. signaled further strikes on Iran-backed groups in the Middle East in response to a deadly attack on U.S. troops in Jordan.

The U.S. also continued its campaign against the Iran-backed Houthis in Yemen, with 36 strikes on Saturday against the groups whose attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected.

“Given the US military strikes avoid directly attacking Iran, we think the Israel‑Hamas ceasefire talks will have the more dominant effect ‑ thereby reducing Middle‑East tensions,” said Commonwealth Bank commodities analyst Vivek Dhar.

“Oil markets will likely respond by continuing to discount supply disruption risks in the Middle East,” he said in a client note on Monday, adding that would likely keep Brent futures below $80 a barrel.

On Friday, the U.S. Department of Justice announced sanctions-evasion charges and seizures linked to an oil trafficking network that it says finances Iran’s Islamic Revolutionary Guard Corps.

It seized more than 520,000 barrels of sanctioned Iranian oil aboard the crude tanker Abyss, which had been anchored in the Yellow (OTC:YELLQ) Sea en route to China.

Iran exported between 1.2 million and 1.6 million barrels per day of crude oil through most of 2023, representing 1%-1.5% of global oil supply.