Iran peace talks face new uncertainty after reported Qeshm strike

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Iran peace talks continue

Highlights

The U.S. reportedly struck Iran's Qeshm Island.
Iran gained negotiating powers as Vance backed talks.
Brent rose 2.11%, and WTI gained 1.83%.

The attack was described as part of a series of limited U.S. military operations conducted in recent weeks. At the same time, diplomatic efforts gained momentum after Iranian President Masoud Pezeshkian announced that Supreme Leader Mojtaba Khamenei had granted his government additional authority to negotiate. The development coincided with renewed optimism from Vice President JD Vance about reaching a peace agreement, Bloomberg reports.

Military tensions persist despite diplomatic progress

Qeshm Island lies near the Strait of Hormuz, a strategic waterway responsible for a substantial share of global oil shipments. The island has drawn military attention because of its reported infrastructure supporting anti-ship missiles, drones, and naval operations. Recent U.S. strikes were described as limited defensive measures intended to avoid a broader escalation. However, the scope of the operations and their consequences remain unclear.

President Donald Trump suggested Monday that negotiations with Iran were moving forward and that an agreement remained possible. He also played down the prospect of renewed large-scale fighting after the midterm elections. Vance expressed similar optimism following contacts with Iranian representatives, although he acknowledged that substantial uncertainty remained. Washington has not established a deadline for reaching a settlement, leaving the possibility of further military action unresolved.

Iran gains negotiating authority as major disputes remain

Pezeshkian's announcement suggested that Tehran could have greater flexibility to pursue a diplomatic solution. However, the government did not specify whether the additional authority would allow concessions on previously disputed issues. Qatari mediators have continued discussions with Iranian officials in Tehran and Doha, while negotiators examine a revised proposal intended to narrow differences between the two countries. Saudi Arabia, Turkey, and Pakistan have also intensified diplomatic efforts to prevent another escalation.

The central disagreements involve maritime access, economic sanctions, and Iran's nuclear program. Tehran wants the U.S. naval blockade of its ports lifted, sanctions eased, and frozen assets released before reopening the Strait of Hormuz. Washington continues to demand nuclear concessions, while Iran insists that its conditions must be addressed before broader negotiations can advance. China and Russia have called for a political settlement, but Tehran has also warned that renewed attacks would trigger retaliation.

Oil prices rebound as Gulf shipping risks remain elevated

The attack on Qeshm Island has renewed attention on the security of the Strait of Hormuz and its importance to global energy supplies. The conflict has disrupted maritime transportation since February, increasing uncertainty for oil producers, shipping companies, and importing countries. Crude prices fell sharply on Monday as investors anticipated diplomatic progress, but concerns about further military escalation subsequently returned.

Brent crude rose 2.11% to $106.53 a barrel, while West Texas Intermediate advanced 1.83% to $98.01. The rebound coincided with renewed concerns about military activity near critical shipping routes, although the strike cannot be identified as the sole driver of the price increase. A lasting agreement could help restore Gulf shipping and stabilize energy markets, while further escalation could prolong supply disruptions and keep oil prices elevated.

Earlier, we reported that Gulf states urge Washington to avoid a new confrontation with Iran.

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