Morning Highlights: Iran Says a Deal Is Far Off After US Strike on Qeshm Island, Lifting Oil on Midterm Day

Tuesday, November 3, 2026 | 6:10

Brent (January) $105.87 | WTI (December) $97.84

Brent +$1.10 (+1.05%), WTI +$1.38 (+1.43%). Both fell more than 7% on Monday. Ukraine hit the Yaroslavl refinery overnight. US midterm elections are today.

Bottom Line

Monday’s drop on the Doha talks has been given back in part. A senior Iranian official told Reuters that the two countries are far from a deal and that Tehran will not accept Washington’s “excessive demands.” Parliament speaker Qalibaf said Iran has given the US a “strong and rational response” and that “the ball is in the US’ court,” per state media. Nothing in either statement describes a text both sides are working from, so the hopes that lifted the market Monday did not last a session.

The other driver is the US strike on Qeshm Island in the Strait of Hormuz, first reported by the Wall Street Journal. Accounts of it differ. One US official said the strikes appeared limited and were not a resumption of major combat operations. Another described them as defensive measures against Iranians using surface-to-air missiles against US assets, and Fox News, citing officials, said they answered Iranian fire at a US aircraft. Some officials said the aim was to stop Iran attacking commercial ships in the strait. IRNA reported several explosions on the island. The Pentagon sent questions to CENTCOM, which did not respond. The Journal said this is the latest in a series of US strikes in recent weeks. A reported strike on Hormuz, even a limited one, is a reminder that the shipping lane is where the risk sits. As one analyst put it, just as markets were pricing in a more diplomatic path, this reminder of military activity flipped the tone.

Phillip Nova’s Priyanka Sachdeva described the market as boxed in. Supply disruption risk continues to provide a floor, while uncertainty over Washington’s next move, political developments and reluctance to carry aggressive positions cap the upside. Brent ended October at its highest in six months on fears of escalation after the vote. Reuters notes the war has become a leading cause of high gasoline prices weighing on voters, and Trump is under pressure to end it, so the election is as much a pricing event for the White House’s incentives as for the oil market.

Ukraine’s drone attack on Russia’s YANOS refinery (Slavneft Yaroslavnefteorgsintez) in Yaroslavl, about 250 kilometres northeast of Moscow, started a fire overnight. Governor Mikhail Yevrayev said air defences repelled an attack involving 124 drones, that the refinery’s infrastructure was damaged, and that two employees were injured. Russia’s military said it downed 856 drones across the country. The plant has a capacity of about 15 million tons of crude a year and makes gasoline, diesel and fuel oil. Ukraine had already hit it at least twice, including a September strike that shut processing. Ukraine has not commented. The strike follows the Wall Street Journal’s report last week that Kyiv paused refinery attacks under pressure from Trump, who had suggested they contributed to higher diesel prices. A Russian official said Friday that strikes resumed on three refineries and a gas-chemical complex in Samara, and Nizhny Novgorod’s governor said an unnamed industrial facility in the region home to the NORSI refinery was damaged Sunday. Energy analysts say the war with Iran was the main driver of the diesel increase. Russia struck Ukrainian energy facilities in the Vinnytsia, Dnipropetrovsk and Kharkiv regions overnight, per Interfax.

The US will bring Ukrainian and Russian delegations together in Abu Dhabi on November 10 and 11 to discuss ending the war, post-war security pacts and de-escalation. Given that both sides struck each other’s energy sites overnight, I’d treat it as a scheduled meeting and not as progress.