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

Oil prices surged in early Asian trade on Tuesday following a report that the United States had launched an attack on Iran's Qeshm Island, igniting fears of an intensification of the ongoing eight-month conflict and the risk of further disruptions to Middle East oil supplies. Brent crude futures increased by 48 cents, or 0.5%, to $105.25 per barrel, while US West Texas Intermediate crude rose by 47 cents, or 0.5%, to $96.93 per barrel.

In a recent newsletter, columnist Ron Bousso offered a concise overview of the global energy sector, accessible via the provided link. Brent crude futures closed $8.66, or 7.63%, lower at $104.77 per barrel on Monday. According to the Wall Street Journal, citing US officials, the United States had targeted Iran's Qeshm Island. Some officials characterized the assaults as defensive measures aimed at thwarting Iran from striking commercial vessels in the Strait of Hormuz.

"The report injected a level of risk premium back into the oil price. Just when markets were beginning to consider a more diplomatic approach, this reminder of persistent military activity has reversed the sentiment," commented Tim Waterer, chief market analyst at KCM Trade. In a separate development, Tehran reported on Monday that negotiations between Iran and the US to end their war were ongoing, following days of Iranian discussions with Qatari mediators.

The talks concluded with revised proposals but no resolution. President Trump expressed uncertainty on Monday regarding his willingness to follow through on a previously announced plan to resume military strikes against Iran, stating that a deal with Tehran might still be possible. The eight-month-long conflict between Iran and the US has significantly curtailed traffic through the Strait of Hormuz, which historically accounted for about one-fifth of global crude oil and natural gas supplies.

This conflict is identified as a primary driver of high gasoline prices, affecting voters and putting pressure on Trump to bring the conflict to an end. Iranian President Masoud Pezeshkian disclosed that Supreme Leader Ayatollah Mojtaba Khamenei had authorized the government to pursue peace negotiations. Additionally, the US plans to convene delegations from Ukraine and Russia in Abu Dhabi on November 10-11 to discuss the cessation of Moscow's war against Ukraine, post-war security arrangements, and de-escalation measures.