- Oil prices rose on Nov 4 amid uncertainty over US-Iran peace talks, Brent crude at $104.30
- Qatar mediates US-Iran talks, but Iran finds US response to proposals unsatisfactory
- US conducted limited strikes on Iran's missile sites, avoiding broader military action
Oil prices resumed their northward move on Wednesday, November 4, despite falling for two consecutive sessions, as investors weighed the uncertainty surrounding peace efforts between the US and Iran. Last checked, Brent crude was up 0.74% at $104.30 a barrel.
Qatar's Foreign Ministry spokesperson said the two sides were considering fresh proposals from mediators to resolve their differences. However, Iran's national security chief said in a social media post that Washington's response to the proposals was still not satisfactory.
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Adding to the uncertainty, the US carried out defensive strikes against Iran earlier this week, targeting surface-to-air missile systems allegedly used against American assets. However, the limited scale of the attacks indicated that Washington was not looking to resume large-scale military operations immediately.
On Tuesday, crude oil prices declined for a second straight session as hopes of a diplomatic breakthrough between Washington and Tehran eased concerns over supply disruptions.
READ | Hormuz Won't Reopen Till US Meets 7 Conditions: Iran Draws Red Line; Oil Prices Off Day's Low
US West Texas Intermediate (WTI) crude futures dropped 37 cents to settle at $96.09 a barrel, after falling below $95 during the session. Brent crude, meanwhile, lost $1.17 to close at $103.60 a barrel.
The latest decline followed reports that the US and Iran were making progress towards a possible agreement. Oil prices had plunged more than 7% on Monday after both countries indicated they were open to negotiations. US President Donald Trump also said Tehran wanted to reach a deal and that an agreement was possible.
Qatar has been playing a key role in mediating between the two countries. Its Foreign Ministry confirmed on Tuesday that a delegation had travelled to Tehran for discussions aimed at finding a way to end the conflict and prevent further escalation.
However, Iran has maintained a tough stance on the negotiations. Foreign Ministry spokesperson Esmaeil Baghaei said Tehran would not accept diplomacy driven by pressure or coercion, state-owned Islamic Republic News Agency (IRNA) reported. This has left the progress of the negotiations uncertain.
At the same time, developments on the ground continue to pose risks to the diplomatic efforts. The US reportedly carried out an attack on Iran's Qeshm Island on Monday. US officials have also indicated that Washington has conducted limited military strikes against Iran in recent weeks.
The operations have reportedly been kept limited to avoid signalling a broader military campaign.
Shipping activity in the region has also faced disruptions, with commercial vessels coming under attack in the Persian Gulf, the Strait of Hormuz and the Gulf of Oman. At least four such attacks have been reported since the beginning of November, according to the United Kingdom Maritime Trade Operations Centre.
Despite the military developments, the Trump administration has continued to express confidence in a possible diplomatic resolution. US Vice President JD Vance told CNN that he and Trump remained optimistic about the chances of reaching a negotiated settlement.
US Secretary of State Marco Rubio had also said earlier that Trump preferred to resolve the conflict through diplomacy rather than military action.
Why Are Oil Prices Still Elevated?
While crude oil has retreated from its recent highs, prices continue to remain elevated as markets assess the chances of a US-Iran agreement and the possibility of fresh military escalation.
A key concern for traders remains the Strait of Hormuz, through which a major portion of the world's oil supplies passes. Any prolonged disruption to shipping through the waterway could tighten global supplies and push prices higher.
Higher crude prices have also added to inflationary pressures in the US, particularly through rising fuel costs. This has become a concern for the Trump administration ahead of the midterm elections.
Last week, two US Federal Reserve presidents flagged the possibility of further interest rate increases to bring inflation under control. Higher borrowing costs can weigh on economic activity and consumer spending, although they also help contain price pressures.
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