Crude oil prices fell for a second day on Tuesday as markets bet on a diplomatic resolution to the Iran war, according to CNBC. The decline followed signals a day earlier from the U.S. and Iranian presidents that they are open to a diplomatic solution.
Prices had risen more than $1 earlier in the day on concerns about energy supplies, Al Jazeera reported. At 07:44 GMT, U.S. West Texas Intermediate was up $1.60 at $98.06 a barrel, and Brent futures were up $1.84 at $106.61.
The early move followed explosions on Qeshm Island and in Bandar Lengeh late on Monday, according to Iran's state-owned IRNA news agency and the semi-official Fars agency. U.S. media, citing U.S. officials, reported that the U.S. military carried out defensive strikes in the Strait of Hormuz.
The Wall Street Journal reported that some officials said the strikes aimed to limit Iran's ability to attack commercial shipping. Fox News and Axios reported they were a response to the Islamic Revolutionary Guard Corps (IRGC) firing at a U.S. aircraft on Monday. Euronews reported that a missile was fired from Qeshm and that a U.S. jet reportedly hit an IRGC surface-to-air missile system. CENTCOM issued no formal statement, and no Iranian official formally confirmed a direct attack on the island, Euronews reported.
Iran's parliament speaker, Mohammad Bagher Ghalibaf, warned on Tuesday that any U.S. strategic error would open "a new battlefield in the war." He told parliament Iran was at its highest level of defensive readiness.
"The ball is in America's court to prevent war," he said.
The IRGC said its electronic warfare systems downed two U.S. MQM-170 reconnaissance drones south of Qeshm Island and destroyed a U.S. MQ-9 drone east of the Strait of Hormuz.
U.S. President Donald Trump wrote on Truth Social on Monday that oil prices were falling because people believed there would be no war with Iran. He said Iran wants a settlement as soon as possible. Asked whether he was considering striking Iran after Tuesday's midterm elections, he replied "no."
"The president and I both feel pretty good about the prospects for potentially coming to a negotiated settlement," Vice-President JD Vance told reporters on Monday, before the reports of strikes emerged.
Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Iran's proposed plan to reopen the Strait of Hormuz could be implemented within two days if Washington meets Tehran's conditions, including lifting its naval blockade of Iranian ports and ending hostilities. Foreign Minister Abbas Araghchi voiced support for Gulf state mediation.
The Associated Press, citing two regional officials and another person familiar with the matter, reported that Israeli Prime Minister Benjamin Netanyahu has been pressing for another wave of strikes on Iran after the U.S. midterms.
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