Oil is heading for its biggest weekly gain since April, as escalating conflict between the United States and Iran disrupts supplies from the Middle East.

Brent crude, the global benchmark, rose above $85, heading for a weekly gain of about 12%, while West Texas Intermediate crude climbed to near $80 per barrel.

The United States carried out another wave of attacks on Iran, targeting sites including defense facilities, after strikes the previous night hit an oil tanker near the main export terminal of the OPEC member state.

U.S. refining margins at record levels

Crude oil jumped to near its highest in about a month, paring a decline of about 30% in the second quarter, as the escalation revived concerns about traffic in the Strait of Hormuz, a chokepoint through which about a fifth of global oil flows.

The conflict also affected supplies of fuels such as diesel and gasoline, pushing U.S. refining margins to record levels.

Simon Lack, portfolio manager at Catalyst Energy Infrastructure Fund, said: 'Refined products are under much greater supply pressure than crude oil.'

He added: 'We only had that short-lived peace, when energy company officials were warning that we are draining inventories, and there is not really much spare capacity left in the system.'

Transits through Hormuz decline, fuel markets tighten

Fuel markets in the United States and Europe show record levels of tightness, increasing the risk of higher costs for consumers already under pressure. This tightness coincides with a collapse in Russian exports after Ukraine attacked the country's refineries, prompting Moscow to ban diesel exports.

While observed transits through Hormuz have declined, some voyages appear to continue, with a few tankers conducting ship-to-ship transfers off the coast of Oman.

Scrutiny is increasing over whether flows through the waterway will continue after Iran earlier this week targeted vessels belonging to the UAE.

Jorge Leon, senior vice president and head of geopolitical analysis at Rystad Energy AS, wrote in a note that the market's focus is shifting from the possibility of a diplomatic breakthrough to whether oil flow can continue despite ongoing security risks.

He said: 'The limited agreement remains our base case, but it has become significantly less likely.' He added: 'The question now is whether the shipping market can adapt to a persistent threat, rather than whether diplomacy can resolve that threat,' when the 60-day negotiation period ends after August 16, according to him.