Oil prices climbed Monday after the US and Iran reached an agreement to pause attacks and restore commercial shipping through the Strait of Hormuz. West Texas Intermediate futures rose 1.9% to $70.56 per barrel, while Brent crude gained 1.3% to $72.91. The ceasefire follows weekend strikes that threatened diplomatic progress.

Tensions escalated Saturday when a commercial tanker transiting the strait was struck by a projectile, prompting US fighter jets to hit 10 Iranian military targets. President Trump warned Iran of severe consequences if violations continued, stating the Islamic Republic could cease to exist if military action escalates further.

Market strategists at ING caution that energy participants appear overly optimistic about Persian Gulf supply recovery. While technical talks continue on the June 17 memorandum of understanding, the analysts note significant upside risk remains if supply returns slowly or violence resumes.

The oil market sits in oversold territory technically, but downward momentum persists despite Monday's gains, suggesting traders remain wary of the fragile diplomatic situation.