Brent Rises 1.7% to $106.58 After U.S. Strikes Near Hormuz

Key Facts

Brent crude rose 1.7% to $106.58 a barrel, while U.S. crude gained 1.5% to $97.88 on Tuesday, November 3, after a U.S. official said Washington had struck Iranian targets near the Strait of Hormuz. The official described the operation as appearing limited and said it targeted Iranians using surface-to-air missiles against the United States in the strait. Iranian state media reported hearing explosions on Qeshm and Hengam islands, and in nearby Bandar Abbas on the mainland. The United States had not publicly announced the strikes, according to The Associated Press, unlike in earlier stages of the war. The strikes came on the eve of the U.S. midterm elections, with security in the Hormuz passage still central to energy supply risks.

Oil's move reflected a sharp contrast between two sessions: Brent fell 7.6% on Monday, closing at $104.77 a barrel, before recovering some of its losses in Tuesday trading. In equity markets, U.S. futures declined, with S&P 500 futures down 0.3% and Dow Jones futures 0.6%, according to The Associated Press. About one-fifth of global oil supplies passed through the Strait of Hormuz in peacetime, making any disruption to shipping directly significant for crude flows. The U.S. Energy Information Administration said Brent futures had exceeded $100 a barrel on July 23, then traded between $79 and $98 through September 8 amid the continuing conflict in the Middle East. This context highlights the breadth of the price range recorded in recent months, as renewed escalation near the strait refocused attention on supply security.

Alongside the strikes, Iran said it had a two-day plan to reopen the strait and resume nuclear talks with the United States. U.S. Vice President J.D. Vance said President Donald Trump and he felt positive about the prospects for a negotiated settlement, adding: "The president and I feel very good about the prospects of a negotiated settlement." Two regional officials said mediators were seeking to advance a framework under which Iran would halt its attacks in the Strait of Hormuz in exchange for Washington lifting its blockade of Iranian ports. They added that mediation efforts had made progress and that further talks were planned during the week. The diplomatic track sets out a proposal to ease restrictions on shipping in return for a halt to the attacks, as the military confrontation continues.

Iranian parliament speaker and chief negotiator Mohammad Bagher Ghalibaf said Tehran had submitted a "firm and rational" response, warning that Iran's armed forces were at the highest level of defensive readiness. He added that "any new U.S. strategic mistake will lead to a new battlefield," and said, "The ball is now in America's court to prevent war." Iran had previously said it could implement its plan to reopen the strait within a week if the United States agreed to 7 conditions, including lifting the blockade. Tehran now says ships will use a route being agreed with Oman. The additional talks scheduled during the week remain the next publicly announced milestone for the mediation effort, while regional officials have not specified the outcome of the negotiations.

On the military track, the last known U.S. strikes before these attacks took place in early September, according to The Associated Press, while U.S. forces continued to enforce a naval blockade aimed at keeping Iranian oil tankers from reaching global markets. The agency said a third U.S. aircraft carrier and thousands of additional troops were heading to the Middle East. It cited regional officials and a person familiar with the matter as saying Israeli Prime Minister Benjamin Netanyahu had pressed for another wave of strikes on Iran after the U.S. elections. These moves come as mediation efforts overlap with the continuing military deployment and blockade. On oil data, the Energy Information Administration set the release of its weekly petroleum status report for data through November 6 at 12 p.m. Eastern time on November 12, after delaying it because of the Veterans Day holiday; it also set November 10 for the release of its short-term energy outlook.