Oil Rises 0.5% After Reports of U.S. Strikes Near Strait of Hormuz
Key Facts
Brent crude rose 48 cents, or 0.5%, to $105.25 a barrel by 01:04 GMT on Nov. 3 after reports of a U.S. strike on Qeshm Island, Reuters reported. U.S. West Texas Intermediate crude gained 47 cents, or 0.5%, to $96.93 a barrel at the same time. Iranian media reported explosions on Qeshm and Hengam islands and in the mainland area of Bandar Abbas, according to the Associated Press. A U.S. official said the strikes targeted Iranians using surface-to-air missiles against the United States in the strait. Washington had not publicly announced the strikes, the AP reported.
Oil rose after a session of sharp losses. Brent settled on Monday, Nov. 2, down $8.66, or 7.63%, at $104.77 a barrel, Reuters reported. Market analyst Tim Waterer said the strike report had restored "some risk premium" to prices. He added that markets had begun pricing in a more diplomatic path before military activity changed the tone of trading. Brent ended October at its highest closing level in six months amid concerns that the Middle East conflict could escalate after the U.S. midterm elections on Tuesday, Reuters reported. Tuesday's moves reflect renewed concerns that military activity will continue in the oil market, the analyst said.
The strikes came as Washington and Tehran continued to discuss a negotiating path. U.S. Vice President J.D. Vance said he and President Donald Trump had a positive impression of the prospects for a negotiated settlement. In contrast, Iranian parliament speaker and chief negotiator Mohammad Baqer Qalibaf said the United States must prevent a resumption of fighting, describing Tehran's response as "firm and rational." Two officials said mediators were working on a framework under which Iran would halt its attacks in the strait in exchange for the United States lifting its blockade of Iranian ports. They added that further talks were scheduled during the week.
Iran said it had a two-day plan to reopen the strait and resume nuclear talks with the United States. It added that ships crossing the passage after it reopens would follow a route agreed between Iran and Oman. In peacetime, about one-fifth of the world's oil supplies pass through the Strait of Hormuz, according to the Associated Press. But U.S. Energy Information Administration data show oil flows through the strait fell from 20.9 million barrels per day in the first quarter of 2025 to 14.9 million in the first quarter of 2026, then to 4.9 million in the second quarter of 2026. In the first half of 2025, those flows accounted for about a quarter of global seaborne oil trade and the equivalent of about 20% of global petroleum liquids consumption, the agency said.
U.S. military movements remain part of the picture around the strait. The Associated Press said thousands of U.S. troops remained in waters off Iran to support the naval blockade when it published its report on Nov. 3. It added that another aircraft carrier and thousands more troops were on their way to the Middle East. In U.S. oil data, the Energy Information Administration's schedule sets an alternative release time for its report for the week ended Nov. 6: 12 p.m. Eastern Time on Nov. 12. The schedule attributed the change to the Veterans Day holiday. Markets are watching the course of negotiations and movements around the strait, as well as the release date for inventory data.
Concerns over maritime security predate the latest developments. On Oct. 29, Iran said three oil tankers had struck mines while trying to leave the strait via a route it described as unauthorized. The Associated Press reported that Iran said the three tankers hit mines and caught fire during the 24 hours before its report. This places the disruption to shipping in the context of tensions that preceded the strikes, while the strait's importance remains tied to its share of global oil flows. Current developments combine military escalation reported by media outlets, mediation efforts and Iran's stated plan to reopen the passage. The additional talks officials said were scheduled during the week are the next announced development in the diplomatic process.