Oil prices rose more than one per cent on Tuesday after reports that US forces had struck Iran’s Qeshm Island, reviving concerns over escalating hostilities and potential risks to energy supplies through the Strait of Hormuz.
Brent crude futures climbed as much as 1.76 per cent to around $106.61 a barrel, while US West Texas Intermediate rose about 1.66 per cent to $98.06, according to market data.
The gains followed a sharp sell-off of more than 7 per cent on Monday, when hopes for a diplomatic resolution to the ongoing conflict between the United States and Iran briefly lifted markets.
US officials told the Wall Street Journal that Washington had carried out strikes on Qeshm Island late Monday. Some described the operations as limited and defensive, aimed at preventing Iran from threatening commercial shipping in the strategic waterway.
A senior Iranian official told Reuters that both sides remained far from a deal to end the war, saying Tehran would not accept what it called Washington’s “excessive demands.”
Iran’s parliament speaker Mohammad Bagher Qalibaf said Tehran had given the United States a “strong and rational response,” adding that “the ball is in the US’ court,” according to state media.
“The report added a degree of risk premium back into the oil price,” said Tim Waterer, chief market analyst at KCM Trade. “Just when markets were starting to price in a more diplomatic path, this reminder of ongoing military activity has flipped the tone.”
The conflict, now in its eighth month, has already caused significant disruption to global oil and gas supplies, with the Strait of Hormuz handling roughly a fifth of the world’s crude.
