Oil prices rose on Tuesday after the U.S. struck Iran's Qeshm Island late Monday. Brent crude climbed 1.75% to $106.60 per barrel, while West Texas Intermediate gained 1.7% to $98.10.
The rebound followed a sharp sell-off on Monday, when oil prices fell over 7% after the U.S. and Iranian presidents signaled openness to a diplomatic solution. Before that signal, Brent prices had reached their highest level since 2022 amid escalation fears.
U.S. officials told The Wall Street Journal that Washington attacked Qeshm Island on Monday and has carried out "limited strikes" against Iran in recent weeks. The military campaign has been kept "deliberately low-profile to avoid signaling plans for a major escalation in fighting," according to an unnamed official quoted in the report.
The Trump administration is simultaneously pursuing diplomacy. Vice President JD Vance told CNN, "The president and I both feel really good about the prospect of potentially coming to a negotiated settlement." U.S. Secretary of State Marco Rubio said Sunday that Trump would prefer to resolve the Iranian war "diplomatically" and does not prefer military force.
High oil prices have contributed to inflation and elevated gasoline prices in the U.S., a concern for Trump before the midterm elections. Last week, two Federal Reserve presidents said interest rates will need to move higher to control inflation.
Investors monitoring WTI crude, Brent crude, and U.S. energy stocks should watch for statements from Trump administration officials on whether diplomatic talks with Iran advance or stall.