On Tuesday, oil prices rose due to the reported attack by the United States on Iran's Geshem Island on Monday evening, and this action occurred a day before the mid-term elections.
Brent crude oil rose 1.75% on Tuesday to $106.60 per barrel; West Texas Intermediate (WTI) crude oil increased by 1.7% to $98.10 per barrel.
One day prior to this, both the presidents of the United States and Iran stated their willingness to resolve the Iranian conflict through diplomatic means, which led to a drop of over 7% in oil prices on Monday.
However, prior to this development, due to market concerns that the United States would launch further strikes against Iran after the mid-term elections, the price of Brent crude oil had risen to its highest level since 2022.
The Wall Street Journal quoted U.S. officials as saying that Washington attacked Iran's Geshem Island on Monday, and added that the United States has been carrying out "limited strikes" against the country for the past few weeks.
Reports say that this military operation against Iran was deliberately kept low-key in order to avoid sending a signal of a large-scale escalation of hostilities. The report quotes an unnamed official as saying so.
Despite these setbacks, the Trump administration is also emphasizing the possibility of resolving the conflict through diplomatic means. Vice President JD Pence told CNN: "Both the president and I are very optimistic about the prospects of reaching an agreement through negotiations."
On Sunday, U.S. Secretary of State Marco Rubio stated that President Trump hopes to resolve the Iran conflict through "diplomatic means" and tends not to use military force.
High oil prices have significantly contributed to inflation and gasoline prices in the United States, which has become an issue of concern for Trump ahead of the mid-term elections.
Last week, two chairmen of the Federal Reserve's regional banks stated that in order to curb inflation, interest rates need to be raised further. Higher interest rates typically suppress growth and increase consumer costs, but they help to bring down inflation.
CNBC's Priyanka Salve contributed to this report.
