Oil Prices Rise as Iran Says War Deal Remains Distant After US Strike

Oil prices climbed by more than $1 a barrel on Tuesday after an Iranian official said an agreement to end the war with the United States and Israel remained far off, while a reported US strike on Iran’s Qeshm Island renewed concerns about escalating hostilities and disruption to energy supplies.

US West Texas Intermediate crude rose $1.60, or 1.66%, to $98.06 a barrel, while Brent crude futures gained $1.84, or 1.76%, to $106.61 by 10:44 a.m. Saudi time.

Both benchmarks had fallen by more than 7% on Monday after discussions between Iranian and Qatari officials raised hopes of progress towards ending the conflict. Those expectations faded as military activity continued and Tehran signalled that negotiations remained difficult.

A US official confirmed on Monday that American forces had struck Iran’s Qeshm Island, according to reports. Some officials described the attacks as defensive operations intended to prevent Iran from targeting commercial vessels travelling through the Strait of Hormuz.

A senior Iranian official told Reuters on Tuesday that Washington and Tehran were still far from reaching an agreement. The official said Iran would not accept what Tehran considered excessive US demands.

Iranian parliament speaker Mohammad Bagher Qalibaf said Tehran had delivered a “strong and rational response” to Washington, adding that “the ball is in the US’ court”, according to Iranian state media.

The renewed tensions prompted traders to factor a greater risk premium into crude prices. Tim Waterer, chief market analyst at KCM Trade, said military activity had reversed the more positive mood created by diplomatic contacts.

“Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone,” he said.

The conflict, which began in late February, has contributed to higher fuel prices and increased pressure on US President Donald Trump to bring the fighting to an end. The US midterm elections are taking place on Tuesday, adding to the political sensitivity surrounding energy costs.

Priyanka Sachdeva, head of market insight at Phillip Nova, said concerns about supply disruptions continued to support prices, while uncertainty over Washington’s next moves and traders’ cautious positioning limited further gains.

Brent crude ended October at its highest level in six months as markets worried that the conflict could intensify again after the US elections.

Supply concerns were also reinforced by developments in Russia and Ukraine. A Ukrainian drone attack damaged an oil refinery in the Russian city of Yaroslavl, regional governor Mikhail Evrayev said on Tuesday.

Separately, Russia launched a large overnight attack on Ukrainian energy facilities in the Vinnytsia, Dnipropetrovsk and Kharkiv regions, Interfax reported, citing the Russian Defence Ministry.

Diplomatic efforts to address the wider conflict between Moscow and Kyiv are also continuing. The United States plans to host delegations from Ukraine and Russia in Abu Dhabi on 10 and 11 November to discuss ending the war, post-war security arrangements and measures to reduce tensions.