Oil reached its highest level in 2 weeks

Oil prices rose on Monday after an attack on a nuclear power plant in the United Arab Emirates halted efforts to end the Iran war and US President Donald Trump is expected to discuss military options on Iran.

Brent crude futures were up $1.65, or 1.51 percent, at $110.91 a barrel by 0703 GMT, but they were below $112, their highest level since May 5.

U.S. West Texas Intermediate crude was up $2, or 1.9 percent, at $107.42 a barrel, its highest since April 30, after rising to $108.70. The front-month June contract expires on Tuesday.

Both contracts rose more than 7 percent last week as hopes for a peace deal to end ship attacks and seizures around the key waterway of the Strait of Hormuz dimmed.

Last week’s talks between Trump and Chinese President Xi Jinping ended without any indication from the world’s top oil importer that it would help resolve the conflict sparked by US-Israeli strikes on Iran.

Drone attacks on the United Arab Emirates and Saudi Arabia and rhetoric from the United States and Iran have raised concerns of an escalation in conflict.

“These drone strikes are a clear warning – renewed U.S. or Israeli attacks on Iran could lead to more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies,” said IG Markets analyst Tony Sycamore.

Emirati officials said they were investigating the source of the attack on the Barakah nuclear power plant, adding that the UAE has the full right to respond to such “terrorist attacks”.

Saudi Arabia, which intercepted three drones entering Iraqi airspace, warned that it would take the necessary operational measures to respond to any attempts to violate its sovereignty and security.

Trump is expected to meet with top national security advisers on Tuesday to discuss options for military action regarding Iran, Axios reports.

In a move that could support oil prices, the Trump administration on Saturday allowed to expire a sanctions waiver that had previously allowed countries including India to buy Russian seaborne oil, following a one-month extension.

“Fears of a renewed strike by Iran have worsened supply concerns… It didn’t help that the United States let sanctions imposed on Russia expire,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.