New Delhi |Crude oil prices rebounded by over 3 per cent to Rs 8,536 per barrel in futures trade on Monday after fresh military exchanges between the US and Iran heightened concerns over supply disruptions in West Asia.

Ending a three-day losing streak, the most-traded contract for June contract rose by Rs 255, or 3.08 per cent, to Rs 8,536 per barrel in 10,943 lots, on the Multi Commodity Exchange (MCX).

It had finished at Rs 8,281 per barrel on Friday.

The July contract also strengthened, rising Rs 225, or 2.77 per cent, to Rs 8,360 per barrel in 2,306 lots.

In the previous session, it had settled at Rs 8,135 per barrel.

Analysts said oil prices recovered as investors reassessed geopolitical risks after the US military carried out fresh strikes on Iranian radar and drone-control facilities following reports that Tehran had shot down an American drone.

In response, Iran's Islamic Revolutionary Guard Corps (IRGC) said it targeted an airbase used by US forces in operations near Southern Iran, while Kuwaiti authorities reported intercepting hostile missile and drone attacks following the American strikes.

The latest military actions highlighted the fragility of the weeks-long ceasefire and raised concerns that negotiations aimed at securing a broader agreement between Washington and Tehran could face fresh hurdles, according to analysts.

"The market participants are pricing in a higher geopolitical risk premium as uncertainty persists around the US-Iran negotiations and the security of energy shipments through the Strait of Hormuz," they added.

In the international markets, Brent oil futures for August delivery rose 2.13 per cent to USD 93.06 per barrel, while West Texas Intermediate went up 2.61 per cent to USD 89.64 per barrel.

Investor sentiment was also supported amid reports that Israel had expanded its military operations in southern Lebanon, raising concerns that regional tensions could broaden.

The gains mark a sharp reversal from last week, when oil prices tumbled about 10 per cent amid reports that Washington and Tehran were discussing a framework agreement that could pave the way for a longer ceasefire and eventually normalise traffic through the Strait of Hormuz.

Traders are now closely watching whether diplomatic channels can prevent further escalation, with any disruption to oil supplies likely to trigger fresh volatility across energy markets.