NEW YORK – Oil prices settled with only modest gains on Monday, a cautious reaction from the market as traders and analysts anxiously await Iran’s response to direct United States military strikes on its nuclear facilities over the weekend. While the attacks initially sent crude benchmarks spiking to five-month highs, the gains were tempered throughout the trading day, reflecting a deep uncertainty over whether the conflict will escalate to a full-blown war that could disrupt critical oil supplies.

Brent crude, the international benchmark, rose by 2.49% to settle at $78.93 a barrel, after earlier touching over $81. West Texas Intermediate (WTI), the U.S. benchmark, saw a similar pattern, advancing 2.56% to $75.73 a barrel. The measured rise comes as a surprise to some market watchers who had anticipated a more dramatic and sustained price surge given the gravity of the U.S. military intervention in the ongoing conflict between Iran and Israel.

The U.S. administration confirmed the strikes on three Iranian nuclear sites, with President Donald Trump hailing the operation as a success that has “obliterated” key components of Iran’s nuclear program. The move marks a significant escalation, directly involving the world’s largest military power in the volatile regional standoff.

Iran has vowed there will be “everlasting consequences” for the U.S. action. High-ranking Iranian officials have stated that the U.S. has now “entered the war clearly and directly” and that all U.S. interests and military bases in the region are now potential targets.

Despite the heated rhetoric, the oil market’s reaction has been one of hesitation, a reflection of a complex geopolitical calculus. The key question holding traders in a “wait-and-see” mode is whether Iran will take the drastic step of attempting to close or disrupt shipping through the Strait of Hormuz, a vital chokepoint through which a quarter of the world’s seaborne oil trade passes.

“The market is walking a tightrope,” said one energy analyst. “On one hand, you have a direct military confrontation involving a major oil producer. On the other, there’s a belief that Iran may be deterred from a full-scale disruption of the Strait of Hormuz, as it would also cripple their own struggling economy.”

Several analysts have pointed out that a significant portion of Iran’s own oil exports, primarily destined for China, travels through the narrow waterway. A closure would be “economic suicide,” as one U.S. official noted over the weekend.

Financial institutions have modeled the potential impact of a more severe disruption. Goldman Sachs warned that if oil flows through the Strait of Hormuz were halved for a sustained period, Brent crude could surge to $110 a barrel.

For now, the market appears to be pricing in a higher geopolitical risk premium, but not yet a full-blown supply catastrophe. The initial shock of the U.S. strikes has been absorbed, and the focus has squarely shifted to Tehran. The world now watches for Iran’s next move, which could range from a calculated, limited retaliation designed to save face, to a more aggressive action that could spiral into a wider regional conflict with devastating consequences for the global economy. The trajectory of oil prices in the coming days and weeks will be inextricably linked to the decisions made in the Iranian capital.