Oil prices climbed for the fourth consecutive day on Thursday following a new wave of U.S. strikes on Iranian military targets, intensifying concerns of a broader conflict and potential supply disruptions in the Strait of Hormuz.
The United States launched attacks on Iranian coastal defense and missile sites on Wednesday after reinstating a naval blockade on Iran's ports, while Iran threatened to halt further energy exports from the region, stating it is in a 'war of survival' with the U.S.
Brent crude futures rose 0.42%, to $85.28 a barrel, while U.S. West Texas Intermediate (WTI) crude futures increased 0.55%, to $80.11 a barrel.
Both benchmarks gained around 0.3% on Wednesday and remained near their highest levels in a month, recorded on Tuesday.
"With the renewed tensions in the Middle East, buying activities have dominated the market," said Hiroyuki Kikukawa, an analyst at Nissan Securities Investment.
"Although mediation efforts by neighboring countries continue and the prevailing opinion dismisses the outbreak of a full-scale war, WTI crude prices could rise to between $85 and $87, depending on how the conflict unfolds," he added.
Oil prices have surged this week with heightened supply disruptions in the Strait of Hormuz due to the attacks. About one-fifth of the world's oil and liquefied natural gas trade used to pass through the Strait before the conflict erupted.
The fighting between Iran and the U.S. reignited last week, undermining a fragile ceasefire reached in June after months of exchanges.
Analysts suggest Iran has indicated it might use its Houthi allies in Yemen to block the Bab al-Mandeb Strait leading to the Red Sea, opening a new front against Washington and jeopardizing two of the world's most crucial energy corridors.
Moreover, Goldman Sachs stated that Brent crude prices could exceed $110 in the fourth quarter if the recovery of Gulf exports remains hampered. However, prices might fall to around $60 to $69 by the year's end if tensions ease and production rebounds faster than anticipated.