Oil has risen for a second day after spiking on Thursday after the suspected attacks on two oil tankers in the Gulf of Oman.
Brent crude (BZ=F) was up 0.3% to $61.47 as the US claimed Iran was behind the attacks, which fuelled fears of reduced crude flows along one of the world’s busiest shipping routes.
The British government is reported to share US suspicions about Iranian involvement in the explosions, in what is thought to be the second attack in a month in the region.
But oil remains volatile after the incidents near Iran and the Strait of Hormuz pushed up oil prices by up to 4.5% on Thursday, with the price of crude down 0.2% (CL=F) to $52.19 on Friday morning.
The explosions have halted the slide in prices that has rattled the industry in recent weeks amid concerns about global demand levels.
Tehran has denied any involvement in the blasts, which saw three separate detonations on board the Norwegian ship the Front Altair and the Japanese Kokuka Courageous. Dozens of staff were rescued.
"The events in the Gulf would now appear to have taken on an overt military dimension and we are waiting to see what action the U.S. Fifth Fleet and other military resources in the region may take," said Tom O'Sullivan, founder of energy and security consultancy Mathyos Advisory.
Tensions in the Middle East have escalated since U.S. President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, especially targeting Tehran's oil exports.
An OPEC report yesterday noted: "Throughout the first half of this year, ongoing global trade tensions have escalated. Significant downside risks from escalating trade disputes spilling over to global demand growth remain."