Oil prices climbed on Tuesday after the U.S. reportedly struck Iran's Qeshm Island late Monday, one day before the midterm elections.

Brent crude was up 1.75% on Tuesday at $106.60 per barrel, while West Texas Intermediate was up 1.7% to $98.10.

Oil prices rebounded a day after the U.S. and Iranian presidents signaled they are open to a diplomatic solution to the Iran war, which saw oil prices sell off over 7% on Monday.

But before this development, Brent prices were at their highest since 2022, as fears of further U.S. strikes on Iran after the midterms mounted.

Washington attacked Iran's Qeshm Island on Monday, U.S. officials told The Wall Street Journal, adding that the U.S. has been carrying out "limited strikes" against the country in recent weeks.

The military campaign against Iran has been kept deliberately low-profile to avoid signaling plans for a major escalation in fighting, the report said, quoting an unnamed official.

But despite these strikes, the Trump administration has also been touting a possible diplomatic solution to the conflict, with Vice President JD Vance telling CNN, "The president and I both feel really good about the prospect of potentially coming to a negotiated settlement."

On Sunday, U.S. Secretary of State Marco Rubio said President Donald Trump would like to resolve the Iranian war "diplomatically," and prefers not to use military force.

High oil prices have contributed substantially to inflation and high gasoline prices in the U.S., which have become a cause of concern for Trump ahead of the midterm elections.

Last week, two Federal Reserve presidents said interest rates will need to move higher to rein in inflation. Higher rates generally crimp growth and raise costs for consumers, but help to bring down inflation.

— CNBC's Priyanka Salve contributed to this report.