Oil prices rose in early Asian trade on Tuesday, November 3, after reports that the United States had struck Iran's Qeshm Island, reversing part of Monday's steep fall and putting the eight-month US-Iran war back at the centre of energy markets on the morning of the US midterm elections.
Source: Reuters
Brent crude futures rose 48 cents, or 0.5 per cent, to $105.25 a barrel by 0104 GMT on Tuesday, while US West Texas Intermediate (WTI) crude was up 47 cents, or 0.5 per cent, at $96.93 a barrel, Reuters reported. The rise came only hours after both benchmarks had closed sharply lower in New York on hopes of a diplomatic deal.
This is the market follow-up to the US strikes on Iran's Qeshm Island reported on Monday, and to Monday's 7 per cent oil plunge on hopes of a US-Iran deal. The strike itself is covered in the earlier Awaaz Punjab report linked here. Read: US strikes Iran's Qeshm Island in the Strait of Hormuz
What happened on Qeshm Island
The Wall Street Journal, citing US officials, reported that the United States struck Qeshm Island on Monday, November 2. Iran's state news agency IRNA reported several explosions on the island the same day. Qeshm sits near the western end of the Strait of Hormuz, about 14 miles from the Iranian port city of Bandar Abbas, and hosts naval and missile bases of Iran's Islamic Revolutionary Guard Corps (IRGC) along with oil and gas infrastructure.
Three US officials told CNN the strikes were limited and defensive in nature, meant to protect US assets in the region. One official said the attack came in response to Iran firing at a US aircraft, and another said: “This was a defensive measure for Iranians using surface to air missiles against US assets.” The officials said the action did not appear to be the kind of major combat operation that has been contemplated, and the Journal reported that Washington has carried out other such small strikes in secret over the past several weeks, keeping them quiet so as not to signal an intent to resume its major military campaign. US Central Command did not immediately respond to a request for comment, Reuters reported.
Iran's claims, and what is not confirmed
Iran's IRGC Aerospace Force has claimed it shot down three US drones near the Strait of Hormuz — what it described as the 55th MQ-9 drone destroyed east of the strait with a newly developed air defence system, and two MQM-170 reconnaissance drones brought down south of Qeshm using electronic warfare, according to Iranian state broadcaster Press TV. The US military has not confirmed those drone claims. Five explosions were reported in succession on Qeshm, with further blasts reported at the mainland port of Bandar Lengeh, and neither the targets hit nor any casualties have been officially disclosed.
What is solid
- The US struck targets on Iran's Qeshm Island on Monday, US officials told the Wall Street Journal and CNN
- IRNA reported several explosions on Qeshm on November 2
- Brent rose 0.5% to $105.25 and WTI rose 0.5% to $96.93 in early Asian trade on Tuesday, after both fell more than 7% on Monday
What is only claimed
- Iran's IRGC claim to have shot down three US drones, including a 55th MQ-9 — not confirmed by the US military
- Whether the Qeshm strikes signal a wider resumption of the war — US officials called them limited and defensive
Trump plays down new strikes as talks continue
The market move came as President Donald Trump, on Monday, raised doubts about whether he would follow through on a threatened resumption of military strikes against Iran after Tuesday's midterm elections. Asked by reporters whether he was considering striking Iran after the elections, Trump replied “no.” He wrote on social media that an agreement with Tehran “could happen,” and said Iran wants to resolve the issue as soon as possible. In an appearance that aired on Fox News on Monday night, Trump broadly defended launching the war but said: “We're not fighting a war... This isn't a war — it's a very soft war... It could happen if they don't make a deal, but they want to make a deal very badly and there's a very good chance we make a deal.”
Vice President JD Vance struck a similar tone on Monday, telling reporters the US and Iran had “made some progress” toward an off-ramp to the war, while noting the president retains both kinetic and non-kinetic options. Tehran said on Monday that contacts with the US to end the war are continuing, after days of Iranian talks with Qatari mediators ended with altered proposals but no breakthrough. Iranian President Masoud Pezeshkian said Supreme Leader Ayatollah Mojtaba Khamenei had granted the government certain authorities for peace talks, and Iranian Foreign Ministry spokesman Esmaeil Baghaei said the ball was in the US court.
The Hormuz offer behind Monday's plunge
Monday's 7 per cent fall was driven by Iran's offer to reopen the Strait of Hormuz within two days if Washington meets its conditions. Baghaei said the basis for negotiations remained Iran's “seven-step proposal,” compressed from the seven days Tehran proposed at the UN General Assembly in September so it could now be implemented within two days. Iran's conditions, as reported, include ending hostilities on all fronts, releasing Iran's frozen assets, lifting oil sanctions and the US ending its blockade of Iranian ports. Washington has not publicly accepted those terms, and several of them remain ones the US would find hard to accept quickly.
Monday's plunge — Brent down 7.63 per cent and WTI down 7.36 per cent on the Hormuz reopening offer — is covered in full in the earlier Awaaz Punjab market report. Read: Oil plunges 7% as Iran offers to reopen Hormuz in two days
Background: an eight-month war and a choked strait
The United States and Iran have been at war since February 28. The conflict has sharply reduced traffic through the Strait of Hormuz, through which about 20 million barrels of oil passed every day before the war — roughly a fifth of global crude oil and natural gas supplies. The US Navy has blockaded Iran's ports since July. Brent ended October at its highest level in six months on concern the conflict could escalate again after the midterms, and the war has cost the US budget at least $47 billion (yaani about $4,700 crore), according to reporting cited by regional officials. Two regional officials and a source familiar with the matter said Israeli Prime Minister Benjamin Netanyahu has been urging the US to launch a new round of airstrikes on Iran after the midterms; Trump has not committed to that. General Brad Cooper, head of US Central Command, visited the White House last week to brief Trump on the conflict, the Journal reported.
What it means for Gulf workers and fuel buyers
For the lakhs of Punjabi and Indian workers living across the Gulf states, every swing in this standoff carries a direct stake: their workplaces, flights home and remittances all run through the same Gulf economies whose oil exports pass the Strait of Hormuz. Reuters noted the Iran war is a leading cause of the high gasoline prices weighing on voters ahead of the midterms — the same fuel-price pressure felt by truck drivers and families in Canada, the US and Punjab whenever Brent holds above $100 a barrel.
What happens next
Traders now wait on two clocks at once: the US midterm results on Tuesday, November 3, and the Qatari-mediated contacts between Washington and Tehran, where further meetings have been planned for this week. If the US publicly responds to Iran's two-day Hormuz proposal, oil could swing sharply again in either direction; if the Qeshm strikes are followed by Iranian retaliation, the escalation fears that lifted prices on Tuesday morning would grow. For now, both governments publicly say talks are continuing — and both keep military options on the table.