The oil market awaited weekly storage reports from the American Petroleum Institute (API) trade group on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday.
Analysts estimated energy firms pulled 2.7 million barrels of crude from storage during the week ended July 10.
If correct, that would be the 13th time in 14 weeks energy firms pulled crude out of storage. It compares with a decrease of 3.9 million barrels in the same week last year and an average decline of 1.5 million barrels over the past five years (2021 to 2025).
Oil prices climb on renewed U.S.-Iran attacks
Oil prices climbed about 2% to a one-month high on Tuesday after the U.S. reimposed a naval blockade on Iran, which will reduce oil flows from the region through the Strait of Hormuz.
Before the Iran war about 20% of global oil supplies flowed through the strait.
Limiting price gains were concerns that higher energy prices could boost inflation, cut global economic growth and ultimately reduce demand for oil.
Brent futures LCOc1 rose $1.43, or 1.7%, to settle at $84.73 per barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 rose $1.20, or 1.5%, to settle at $79.34.
For the second straight session, Brent closed at its highest since June 12 and WTI at its highest since June 15.
That price increase kept Brent in technically overbought territory for a second day in a row for the first time since March.
"The resumption of attacks between the U.S. and Iran is accelerating this week and will likely continue given the additional U.S. bombing overnight that followed reinstatement of a U.S. blockade of the Strait of Hormuz," analysts at energy advisory firm Ritterbusch and Associates said in a note.
Trump steps back from planned Hormuz security fee
U.S. President Donald Trump stepped back from a proposal to charge a 20% fee to guard the Strait of Hormuz as part of the conflict with Iran, saying he would instead seek investment deals with Gulf states.
U.S. forces had carried out waves of attacks for the third night after Tehran said it had closed the strait. Trump on Monday reinstated a blockade of Iranian shipping and proposed the fee.
Hours before the fee was to take effect, Trump said the strait was open to all shipping traffic except that of Iran. After that comment, U.S. crude futures briefly turned negative on Tuesday morning. Prices recovered later in the day on reports that one Indian crew member was killed and eight others were wounded when Iranian cruise missiles struck two Emirati oil tankers.
The attacks have fed doubts that a memorandum of understanding signed last month will lead to a permanent halt in the war that has disrupted global energy supplies and stoked inflation fears.
In early July, when it looked like the ceasefire between the U.S. and Iran would hold, futures for Brent and WTI were trading near levels seen before the U.S. and Israel started bombing Iran on February 28.
Diesel margins widen as Russia and Ukraine energy attacks continue
Data showed that U.S. consumer inflation slowed more than expected in June as energy prices retreated, but financial markets still expect an interest rate hike from the Federal Reserve.
Fed Chairman Kevin Warsh on Tuesday vowed to "do my job" if challenged by Trump, who has said he wants the Fed to cut interest rates and boost economic growth.
Ukraine's military said it struck two Russian oil refineries in the Bashkortostan and Krasnodar regions overnight. Ukrainian attacks on Russia's energy infrastructure have caused Moscow to curtail diesel exports, boosting diesel prices around the world.
In the U.S., diesel futures HOc1 are up about 21% so far in July versus a roughly 14% gain for U.S. crude. This has boosted the 3-2-1 CL321-1=R and diesel HOc1-CLc1 crack spreads, which measure refining profit margins, to record highs, according to LSEG data.
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