SEATTLE (Oil Monster): Oil prices rose in early Asian trading on Tuesday after reports that the United States had struck Iran's Qeshm Island, reviving concerns about escalation and prolonged disruption to Middle East oil supplies.
Brent crude futures rose 48 cents, or 0.5%, to $105.25 a barrel by 0104 GMT, while U.S. West Texas Intermediate crude gained 47 cents, or 0.5%, to $96.93 a barrel.
Brent had settled $8.66, or 7.63%, lower at $104.77 a barrel on Monday as renewed diplomatic efforts raised hopes that the conflict could move toward a negotiated settlement.
The United States struck Iran's Qeshm Island, according to a Wall Street Journal report citing U.S. officials.
Some officials described the strikes as defensive measures intended to limit Iran's ability to threaten commercial shipping in the Strait of Hormuz.
"The report added a degree of risk premium back into the oil price. Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone," said Tim Waterer, chief market analyst at KCM Trade.
The early Tuesday rebound shows how sensitive crude remains to shifts between diplomacy and military escalation. Monday's sharp decline reflected renewed hopes for negotiations, while reports of fresh U.S. strikes quickly returned some geopolitical premium to oil prices.
Tehran said Monday that contacts between Iran and the United States aimed at ending the war were continuing after several days of talks involving Qatari mediators ended with revised proposals but no breakthrough.
U.S. President Donald Trump also raised doubts Monday about whether he would proceed with threatened renewed military strikes and said an agreement with Tehran remained possible.
Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had granted the government certain authorities for peace talks.
The U.S.-Iran conflict, which began in late February, has sharply reduced traffic through the Strait of Hormuz, a route that previously carried about one-fifth of global crude oil and natural gas supplies.
Brent ended October at its highest level in six months amid concerns that the Middle East conflict could escalate again following the U.S. midterm elections.
Separately, the United States is expected to bring together delegations from Ukraine and Russia in Abu Dhabi on November 10-11 for talks on the war in Ukraine, post-war security arrangements and de-escalation.
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Courtesy: www.reuters.com
