Oil prices rose Tuesday, Nov. 3, after the United States struck Iran’s Qeshm Island, reviving concerns about disruption to one of the world’s busiest oil shipping routes. Brent crude was up 0.97% at $105.77 per barrel in Tuesday trading, while West Texas Intermediate gained the same percentage to reach $97.41 per barrel, according to CNBC.
The bounce came a day after oil sold off more than 7% on Monday, when the U.S. and Iranian presidents signaled they were open to a diplomatic end to the war. Brent settled at $104.77 that day, down 7.63%. Before that drop, Brent had climbed to its highest level since 2022 as traders braced for possible U.S. strikes after the midterm elections, CNBC reported.
What Happened In The Strike On Qeshm Island
U.S. forces struck Qeshm Island late Monday, the night before the midterm elections. The Wall Street Journal first reported the strike, citing U.S. officials, and three U.S. officials told CNN the action was limited and defensive. One official said it came in response to Iran firing at a U.S. aircraft.
“This was a defensive measure for Iranians using surface-to-air missiles against U.S. assets,” another official told CNN.
Qeshm Island lies about 14 miles from the Iranian port city of Bandar Abbas, and it’s central to Iran’s efforts to control shipping through the Strait of Hormuz, CNN reported. Before the war, about 20 million barrels of oil moved through the strait every day. The U.S. has struck the island before during the conflict, according to CNN, and U.S. officials told the Journal the military has been carrying out “limited strikes” on Iran in recent weeks. That campaign has been kept deliberately low-profile to avoid signaling a major escalation, CNBC reported.
What The Price Swings Mean For Supply Concerns
The whipsaw in oil prices, a steep drop Monday followed by Tuesday’s rebound, tracked closely with shifting signals about the prospects for a negotiated end to the conflict. Qeshm’s position on the strait explains why markets react so quickly to military activity there. Any threat to that flow tends to push crude prices higher.
Vice President JD Vance said Monday that U.S. officials see room for more diplomatic progress despite the uncertainty. “The Iranians are always a little unpredictable, and as the president always says, he retains kinetic options, he retains non-kinetic options. But we’ve certainly made some progress. We’ll see if we can make some more,” Vance said.
Vance also told reporters he’d spoken with the president about an hour earlier. “Look, the president and I both feel pretty good about the prospects for potentially coming to a negotiated settlement. We’re going to keep on working at it,” he said, adding that no deadlines had been set for Iran.
On Sunday, U.S. Secretary of State Marco Rubio said President Donald Trump would prefer to resolve the war diplomatically rather than through military force, according to CNBC.
Background On Inflation And Election-Year Pressure
High oil prices have fed inflation and driven up gasoline prices across the U.S., a concern for Trump heading into the midterms, CNBC reported. The administration has paired its limited strikes with public diplomatic outreach.
For more on how energy costs are playing into the political landscape, check out our coverage of diesel fuel prices tied to the Russia deal and the broader costs of Trump administration policies.
What Happened Next
Tuesday’s gains didn’t last. Oil prices settled lower Tuesday for a second straight session on hopes that peace talks would end the war, Reuters reported. Democrats then won control of both chambers of Congress in the midterm elections, and crude fell about 8% on Wednesday, Nov. 4, as markets priced in a faster end to the conflict. By Friday, Nov. 6, oil was on track for a weekly loss of about 12%.
Oil markets will keep reacting to any military activity near the Strait of Hormuz and to statements from U.S. and Iranian officials. Drivers looking to cut their fuel costs can also check out our reporting on EV sales trends.
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