US strikes Iran's Qeshm Island, oil prices rise as fears of renewed conflict and disruptions mount

The US struck Iran's Qeshm Island, pushing oil prices up 0.5% in early Asian trade. The attacks have revived concerns over an escalation of the conflict and prolonged disruption to oil supplies through the Strait of Hormuz.

Oil prices rose in early Asian trade on Tuesday after the United States struck Iran's Qeshm Island, reviving concerns over an escalation of the conflict and prolonged disruptions to energy supplies from the Middle East.

According to a Reuters report, Brent crude futures gained 48 cents, or 0.5%, to $105.25 a barrel by 0104 GMT, while US West Texas Intermediate (WTI) crude rose 47 cents, or 0.5%, to $96.93 a barrel.

The US carried out strikes on Qeshm Island on Monday, the Wall Street Journal reported citing American officials. The attacks have been described as "defensive measures intended to prevent Iran from targeting commercial shipping in the Strait of Hormuz".

The strikes are part of a series of limited US attacks on Iran in recent weeks that Washington has not publicly announced, the Journal reported. The administration has reportedly sought to keep the operations low-profile to avoid signalling a return to large-scale military action.

Qeshm Island is located near the entrance to the Strait of Hormuz and hosts an underground missile site, a naval base and a major desalination plant. The US had also targeted the island during earlier phases of the conflict.

Oil prices regain risk premium after US strikes

Brent crude had settled 7.63% lower, or $8.66, at $104.77 a barrel on Monday. The benchmark had ended October at its highest level in six months amid concerns that the Middle East conflict could escalate after the US midterm elections.

The conflict, which began in late February, has reduced traffic through the Strait of Hormuz. The waterway earlier handled about a fifth of global crude oil and natural gas supplies.

Trump plays down prospect of renewed war

The reported strikes came as US President Donald Trump played down the possibility of a return to full-scale conflict with Iran. Asked on Monday whether he was considering fresh attacks after the midterm elections, Trump said no.

Trump also said a deal with Tehran remained possible, while Iranian Foreign Ministry spokesperson Esmail Baghaei said that the next move rested with Washington. Iranian officials have warned that the country would retaliate if the US reignited the conflict.

Meanwhile, contacts between the two countries are continuing following discussions involving Qatari mediators, according to Reuters. The talks have not yet produced a breakthrough though.