Oil prices bounce back after report of strike on Iran
Prices rose after reports of a U.S. strike on Iran’s Qeshm Island reversed some of Monday’s steep losses. Brent traded at $105.25 a barrel and U.S. West Texas…
Oil prices bounce back on Tuesday after a report that the United States struck Iran’s Qeshm Island, with Brent crude futures rising 48 cents to $105.25 a barrel in early Asian trade. U.S. West Texas Intermediate gained 47 cents to $96.93 a barrel, reviving concern that the conflict could escalate and further disrupt Middle East oil supplies.
The rebound followed a sharp retreat. Brent had settled at $104.77 a barrel on Monday, down $8.66, or 7.63%, as traders reacted to signs that Washington and Tehran were still pursuing talks. The reported strike shifted attention back to the possibility of renewed military action.
Why did oil prices bounce back?
The Wall Street Journal reported that the United States struck Qeshm Island, citing U.S. officials. Some officials described the attacks as defensive, saying they were intended to prevent Iran from freely targeting commercial ships in the Strait of Hormuz.
Tim Waterer, chief market analyst at KCM Trade, said the report restored a risk premium to oil prices after markets had begun to anticipate a diplomatic path. “Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone,” Waterer said.
The report contrasted with earlier coverage pointing to continuing diplomatic efforts and statements by President Donald Trump that cast doubt on a return to strikes. Trump said on Monday that a deal with Tehran could happen, while also raising questions about whether he would carry out a threatened resumption of military action.
Diplomacy and supply risks pull markets in opposite directions
Iran said on Monday that contacts with the United States to end the war were continuing. Talks involving Iranian and Qatari mediators had produced revised proposals but no breakthrough, leaving traders to weigh the prospect of negotiations against the latest military report.
The two forces moved prices in opposite directions. Hopes for diplomacy had helped drive Monday’s decline, while the strike report prompted renewed concern over supply disruption. The conflict has sharply reduced traffic through the Strait of Hormuz, which previously carried about a fifth of global crude oil and natural gas supplies.
That makes developments around the waterway relevant beyond oil traders. A prolonged disruption could keep pressure on energy supplies, while renewed diplomatic progress had been one reason investors were willing to price in less risk. The report of a strike has put that balance back in question.
Some market participants argue that conflict-related risk is already reflected in prices. Priyanka Sachdeva of Phillip Nova said another sustained rally would be difficult without evidence of further damage to physical supplies or critical energy infrastructure. The distinction is important: headlines can move prices, but lasting supply losses would represent a more direct constraint on available oil.
Brent had ended October at its highest level in six months amid concern that the Middle East conflict could escalate again after Tuesday’s U.S. midterm elections. The latest rise came as markets absorbed the Qeshm Island report and weighed it against continuing contacts between Iran and the United States.
Brent futures were up 48 cents, or 0.5%, at $105.25 a barrel by 0104 GMT on Tuesday.
