U.S. Strikes Qeshm While Oil Bets on an Iran Deal
U.S. Strikes Qeshm While Oil Bets on an Iran Deal
Oil markets began the week pricing in two sharply conflicting signals: a reported U.S. strike on Iran’s Qeshm Island, and fresh indications that Washington and Tehran may be searching for an exit.
Crude had surged more than 10% in October as reports circulated that Washington was preparing possible strikes after the U.S. midterm elections. Then, on Monday, oil sold off more than 7% after both sides signalled they were open to talks. President Donald Trump said Tehran wanted “to make a deal and that could happen.”
The military picture, however, remained combustible. U.S. officials told The Wall Street Journal that Washington attacked Qeshm on Monday and had conducted “limited strikes” in recent weeks—an operation reportedly kept quiet to avoid advertising a broader escalation. A separate report also placed the Qeshm strike on the eve of the election.
At sea, the danger has not receded. At least four commercial-ship attacks have been reported since the start of the month in the Persian Gulf, Strait of Hormuz and Gulf of Oman, according to the UK Maritime Trade Operations Centre, as cited in the market report.
By Tuesday, though, traders were focused on diplomacy. Qatar said it was continuing to mediate, with a delegation in Tehran seeking an agreement to halt escalation and end the conflict. West Texas Intermediate fell 42 cents to $96.04 a barrel, after briefly dropping below $95, while Brent lost $1.23 to $103.54.
The administration’s public message has reinforced that wager. Vice President JD Vance said he and Trump felt “really good about the prospect of potentially coming to a negotiated settlement,” while Secretary of State Marco Rubio said Trump preferred a diplomatic resolution to using force. For traders—and for a White House facing inflation and costly gasoline—the question is whether those words can outrun the next strike.
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