Crude futures climbed more than $1 a barrel on Thursday as the conflict between the US and Iran seemed to be intensifying in the Strait of Hormuz.
Brent crude futures rose $1.62, or 1.59 per cent, to $103.53 a barrel at 11:35 CDT (16:35 GMT) after settling above $100 for the first time in more than two weeks on Wednesday. West Texas Intermediate futures rose $1.03, or 1.11 per cent, at $93.99.
Iran flaunted its tightened grip over the Strait of Hormuz with video of its commandos storming a huge cargo ship, after the collapse of peace talks that Washington had hoped would open the world's most important shipping corridor.
US President Donald Trump said in a post on social media that he had ordered the US Navy, "to shoot and kill any boat," mining the strait. Both benchmarks closed more than $3 higher on Wednesday after a lack of progress in the peace talks and larger-than-expected draws on US stocks of gasoline and distillates.
John Kilduff, partner with Again Capital, said the market was being buffeted by alternating news reports from Trump extending the ceasefire this week to threatening on Thursday morning to sink Iranian mine-laying ships.
"Some people call it 'headline bingo,' I call it headline roulette," Kilduff said. "I fear we're going to wake up one day and realize we're in a much worse (supply) position and prices are going to reset to a much higher level."
While Trump extended a ceasefire between the countries after a request by Pakistani mediators, Iran and the US are still restricting transit of ships through the strait, which carried about 20 per cent of daily global oil supplies until the start of the war on February 28.
Trump said on Thursday the US had "total control" over the strait, and that it was, "sealed up tight," until Iran made a deal. Iran seized two ships in the waterway on Wednesday.
Trump also has maintained a US Navy blockade of Iran's trade by sea while Iran's top negotiator, Mohammad Baqer Qalibaf, has said a full ceasefire only makes sense if the blockade is lifted.
However, about 10.7 million barrels of Iranian crude exports crossed through the strait and left the area blockaded by the US Navy between April 13 and 21, data analytics company Vortexa said.
The US military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka, shipping and security sources said on Wednesday.
Trump has not set an end date for the extended ceasefire, White House press secretary Karoline Leavitt told reporters.
The Federal Reserve Bank of Dallas on Thursday said a survey of 120 oil and natural gas company executives this month found 39 per cent expect traffic through the strait to return to normal by August and 26 per cent expect normal traffic through the waterway by November.
Twenty per cent of the executives surveyed between April 15 to 20 believe traffic will be normal by May, according to the Dallas Fed.
US exports of crude oil and petroleum products climbed by 137,000 barrels per day to a record 12.88 million bpd last week, as Asian and European countries bought supplies after disruptions from the war, the Energy Information Administration said on Wednesday.
US crude stocks rose while gasoline and distillate inventories fell.
(Reporting by Erwin Seba, Ahmad Ghaddar and Robert Harvey; Editing by Franklin Paul, Paul Simao and Keith Weir)