Oil prices saw a slight uptick following reports that the U.S. had struck Iran’s Qeshm Island, just hours before the elections
News of the U.S. strike on Iran’s Qeshm Island fueled concerns that the eight-month-long conflict could escalate, potentially leading to prolonged disruptions in oil shipments from the Middle East.
As of 03:55 GMT, the price of a barrel of Brent crude rose by 3 cents (0.03%) to $104.80. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed 20 cents (0.21%) to $96.66 per barrel.
On Monday, both benchmarks had fallen by more than 7% after discussions between Iranian and Qatari officials raised hopes that the conflict involving the U.S., Israel, and Iran might come to an end.
On Tuesday, the U.S. struck Iran’s Qeshm Island. Some officials described the attacks as "defensive" in nature, intended to prevent Iran from targeting commercial vessels in the Strait of Hormuz.
This geopolitical development immediately added a fresh risk premium to oil prices. Just as markets had begun to price in the possibility of a diplomatic resolution, the reminder of ongoing military activity shifted the sentiment entirely.
However, given that a significant geopolitical risk premium is already baked into oil prices, this development alone may struggle to sustain a prolonged rally. However, concrete evidence of further disruptions to physical supplies or critical energy infrastructure would change the situation.
Meanwhile, the administration in Tehran announced on Monday that discussions aimed at ending the conflict between Iran and the United States are ongoing, following days of talks, mediated by Qatar, that failed to yield any tangible progress.
On Monday, Trump made remarks that cast doubt on whether he would actually follow through on his threat to resume military strikes against Iran.
The conflict with Iran has become a primary driver of high gasoline prices, which are placing a burden on voters, and Trump is under pressure to bring the conflict to an end.
Brent crude closed out October at its highest level in six months, driven by concerns that the conflict in the Middle East could escalate further following the U.S. midterm elections on Tuesday.
Iranian President Masoud Pezeshkian stated that Supreme Leader Ayatollah Mojtaba Khamenei has granted the government specific authority to pursue peace negotiations.
Additionally, the United States will bring together delegations from Ukraine and Russia in Abu Dhabi on November 10–11, with the aim of ending Moscow’s war against Ukraine, addressing post-war security arrangements, and de-escalating tensions.
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