Brent rises 0.5% to $105.25 after reports of US strike on Qeshm Island
Key Facts
Brent crude futures rose 48 cents, or 0.5%, to $105.25 a barrel by 01:04 GMT on November 3, after a report of a US strike on Qeshm Island raised concerns about an escalation of the conflict and disruption to Middle East oil supplies, according to Reuters. The gain came in early Asian trading, as geopolitical risks returned to the forefront of crude pricing. Reuters attributed the strike report to The Wall Street Journal, which cited US officials. Some officials said the strikes were defensive, aimed at preventing Iran from targeting commercial ships in the Strait of Hormuz. In a separate report, Reuters quoted a US official as saying the strikes targeted Qeshm Island in the strait after Iran showed openness to peace talks.
Tuesday's rise reversed part of the steep decline in oil during the previous session. Brent futures settled at $104.77 a barrel on Monday, down $8.66, or 7.63%, according to a Reuters report. Another Reuters report described the previous session's decline as 7%, before prices rose 1.6% on November 3 and topped $100 a barrel. The comparison shows that Tuesday's move followed sharp losses, as investors reassessed the likelihood of continued disruption in the region. The rise did not return prices to levels seen before Monday's drop, with the price in early trading remaining at $105.25 a barrel.
Tim Waterer, a market analyst, said the strike report restored a risk premium to oil prices after markets had begun pricing in a diplomatic path. That assessment came as signs of military escalation overlapped with indications that political contacts could continue. The Associated Press quoted a US official as saying the United States had carried out strikes it described as defensive against Iranian targets in the Strait of Hormuz. Iranian television also reported explosions on Qeshm Island. The strikes appeared limited, while back-channel discussions about how to handle the war continued, the agency reported.
Supply risks are particularly significant for India, where dependence on crude oil imports reached 88.6% during April to January of fiscal year 2025-26, compared with 88.2% in the same period a year earlier, according to an economic review by the Ministry of Economic Affairs. The country imported 206.3 million metric tons of crude during the period; 46.9% came from the Middle East, 34.6% from Eurasia and 7.2% from North America. The share of crude imports from OPEC countries rose to 50.1%, from 48.3% in the corresponding period of the previous fiscal year. These figures show India's exposure to energy-market volatility, alongside the geographic diversity of its supply sources. Before the crisis, about 45% of India's crude imports passed through the Strait of Hormuz, while the share of sources that do not pass through it rose to about 70% in March 2026, compared with 55% before the conflict began, according to a statement by India's Ministry of Petroleum to parliament.
As part of its supply diversification, India's Ministry of Petroleum said the country imports crude from 40 countries, compared with 27 in fiscal year 2006-07. September data show another aspect of the Indian market backdrop: industrial production grew 6.7% year on year, according to the official data portal of the Ministry of Statistics. The Econoday/CME survey had forecast growth of 7.2%, while the revised reading for August was 7.8%. The Ministry of Statistics said the September index was scheduled for release on October 28, 2026. Reuters reported in late October that higher oil prices could keep Indian government bonds under selling pressure, as investors watched liquidity and the Federal Reserve's decision; the benchmark 10-year yield closed at 7.4740% on October 23, after a weekly rise of 9 basis points, its tenth consecutive weekly increase.
A Reuters report said India's 10-year yield had risen 62 basis points over the nine weeks before the October 26 report, the longest run of weekly increases in the available data since 1998. Traders expected the yield to move between 7.41% and 7.50% during the week that began on October 26, while tracking oil prices and liquidity. The report also said the rupee closed at 94.94 to the dollar in the week ended October 23, under pressure from higher oil prices and investor risk aversion. India's sensitivity to oil is also reflected in an estimate cited in a Ministry of Economic Affairs report from the Reserve Bank of India: a 10% rise in crude above the baseline assumption, with the increase fully passed through to domestic prices, could raise inflation by 30 basis points. The strike report combined accounts of military action with indications of Iranian openness to peace talks, as President Donald Trump said strikes on Tehran could be delayed until after the midterm elections.