Oil rises after report of US strike on Iran’s Qeshm Island

Oil prices climbed in early Asian trading on November 3 after reports of a US strike on Iran's Qeshm Island, heightening fears of a prolonged conflict and potential disruptions to Middle East oil supplies. Brent crude futures surged 48 cents, or 0.5%, to $105.25 a barrel, while US West Texas Intermediate crude increased by 47 cents, or 0.5%, to $96.93 a barrel.

Brent crude futures fell $8.66, or 7.63%, to $104.77 a barrel on November 2. According to the Wall Street Journal, citing unnamed US officials, the US targeted Iran's Qeshm Island, describing the action as defensive to stop Iran from attacking commercial vessels in the Strait of Hormuz. Tim Waterer, chief market analyst at KCM Trade, noted that the report added a risk premium to oil prices, reversing the earlier optimistic trend.

Despite ongoing talks between Iran and the US to end their war, Tehran reported on November 3 that ongoing negotiations with Qatari mediators resulted in revised proposals but no breakthrough. President Trump expressed doubts on November 3 regarding whether he would resume military strikes against Iran and suggested a potential deal with Tehran.

The ongoing US-Iran conflict, which began in late February, has significantly reduced traffic through the Strait of Hormuz, a critical route for global crude oil and natural gas shipments. The war is a major driver of high gasoline prices, putting pressure on voters and prompting President Trump to seek an end to the conflict. Iranian President Masoud Pezeshkian announced that Supreme Leader Ayatollah Khamenei had authorized peace negotiations.

Additionally, the US will convene delegations from Ukraine and Russia in Abu Dhabi on November 10 and 11 to discuss the cessation of Russia's war against Ukraine and post-war security agreements.