Oil futures edge up after U.S. said to strike Iran's Qeshm Island

Oil futures edged higher overnight after the U.S. reportedly attacked Iran's Qeshm Island, fueling concerns that the war could escalate, even as President Trump insisted he was in "no rush" to resume military action.

WTI crude futures (CL1:COM) were up 1.4% and Brent oil futures (CO1:COM) rose 1.5%, a day after they posted their biggest intraday declines since July amid renewed hopes for diplomacy in the U.S.-Iran war.

The U.S. struck Iran's Qeshm Island late on Monday, the latest of its smaller-scale strikes against the country in recent weeks, U.S. officials told The Wall Street Journal.

They described the limited strikes as defensive, aimed at block Iran from attacking commercial ships in the Strait of Hormuz.

Before the Qeshm Island strike, Iran on Monday fired a missile at a U.S. jet fighter, which fired back in self-defense. In a separate incident on Monday, U.S. forces intercepted an Iranian missile that originated out of Qeshm and was targeting commercial shipping.

Still, Trump downplayed the possibility of resuming attacks on Iran after the midterms. "We had a war with Iran. We won," he said on Monday. "I don't know if you even call it a war because we haven't been doing any fighting for months."

In an interview with Axios, Trump said the U.S. will do something "one way or the other, but there is no rush."

ING strategists said while there are positive signs for diplomacy, it's probably too early to think escalation risks have passed.

"What is clear is that strong signals of progress in peace talks would mean more downside for prices," they pointed out. "The market still has a large risk premium baked in, particularly given the strong oil flows from the Persian Gulf."