Oil Rises After the Qeshm Strike Report: Brent Back Above $105 as Election Day Opens

Oil prices rose in early Asian trade on Tuesday after reports that the United States had struck Iran's Qeshm Island, raising concerns about an escalation of the eight-month conflict and prolonged disruption to Middle East oil supplies. Brent crude futures rose 48 cents, or 0.5 percent, to $105.25 a barrel, and U.S. West Texas Intermediate crude rose 47 cents, or 0.5 percent, to $96.93.

The rise only partly retraced Monday's fall. Brent had settled $8.66, or 7.63 percent, lower at $104.77 on Monday, after talks between Iranian and Qatari officials lifted hopes for an end to the U.S.-Israeli war with Iran and a stabilization of crude supply through the Strait of Hormuz — the waterway that, before this war, carried about a fifth of the world's crude oil and natural gas. "The report added a degree of risk premium back into the oil price," said Tim Waterer, chief market analyst at KCM Trade. "Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone."

The diplomacy has not stopped; it has just not broken through. Tehran said on Monday that contacts between Iran and the United States to end the war are continuing, after days of Iranian talks with Qatari mediators ended with altered proposals but no breakthrough, and Iran's president said the supreme leader had granted the government certain authorities for peace talks. President Trump, for his part, raised doubts Monday about resuming major strikes and said a deal could happen.

For the capital region, the barrel is not an abstraction: Brent ended October at its highest in six months on fears the conflict would escalate after Tuesday's elections, and the Iran war is a leading cause of the high gasoline prices weighing on voters as they decide control of Congress. Tuesday's early price is the market's Election Day opening position — hedged, above $105, and waiting on Washington.