As the escalation of hostilities between the US and Iran kept traders on edge over the risk of supply disruptions from the Middle East, despite recent profit-taking.

As of 3:36 AM, Brent crude futures for September were up 0.8% at $84.88 per barrel, while West Texas Intermediate (WTI) futures were up 0.9% at $79.62 per barrel.

Both benchmarks had finished the week up more than 11% following the latest escalation of the conflict, which added a significant geopolitical premium to prices. The US military reported its sixth consecutive night of strikes on Iran on Thursday, aimed at further crippling the country's military capabilities.

Tehran has repeatedly threatened to block shipping through the Strait of Hormuz, through which about one-fifth of the world's oil and petroleum product shipments pass.

Shipping activity in the strait has already declined. Vessel traffic fell sharply this week after the US reimposed a naval blockade on Iranian ports.

Nevertheless, the market has so far avoided another explosive rally, despite a 10% jump on Monday, as traders weigh the likelihood of prolonged supply disruptions and the possibility that producers will be able to partially offset any potential shortfalls.

Investors are monitoring diplomatic developments following reports that regional mediators, including Qatar, Egypt, and Pakistan, are continuing negotiations despite the collapse of a previously reached truce.

US inventory data released this week also pointed to tightening oil market conditions. The Energy Information Administration (EIA) reported that U.S. commercial crude oil inventories fell by 1.7 million barrels to 409.7 million barrels in the week ending July 10, a more-than-expected decline. Gasoline inventories, meanwhile, fell by 1.5 million barrels.

Earlier this week, industry data from the American Petroleum Institute (API) showed that U.S. crude oil inventories fell by approximately 564,000 barrels over the same period, less than analysts had expected.