Oil prices rose slightly on Friday after the United States and Iran escalated their attacks across the Gulf, with the collapse of the ceasefire between them restricting oil flows through the Strait of Hormuz, and Tehran calling on the Houthi group to prepare to close the oil export outlet via the Red Sea.

Brent crude futures rose 7 cents, or about 0.08%, to $84.30 a barrel at 06:32 GMT, while US West Texas Intermediate crude futures rose 16 cents, or 0.2%, to $79.11 a barrel.

Benchmark crude oil contracts have risen by nearly 12% this week, with Brent heading for a third consecutive weekly gain, while WTI is on track for a second straight weekly gain.

Tim Waterer, chief market analyst at KCM Trade, said: 'The potential threat of the Red Sea becoming another major supply disruption point further complicates global oil price forecasts.' He noted that the 'double-risk scenario' keeps a geopolitical premium embedded in both benchmarks.

For the first time since signing a memorandum of understanding that halted fighting last month, the United States launched two major waves of airstrikes in a single day on Wednesday, most targeting sites near Iran's southern coast. It continued firing on Thursday.

Meanwhile, Qatar's Defense Ministry announced that its armed forces foiled an Iranian missile attack early Friday, while the Interior Ministry said a child was injured by shrapnel from interception operations. Fatih Birol, executive director of the International Energy Agency, said Thursday at a Council on Foreign Relations event in Washington: 'Oil security remains a very important issue.'

He added: 'We should be worried, and I am already worried, if the situation does not improve in the next few weeks.'

In a statement, US Central Command said US forces began 'a new wave of strikes against Iran for the sixth consecutive night aimed at weakening Iranian military capabilities.' Tehran responded by launching missiles and drones targeting US military bases in neighboring countries, including heavy shelling on an air base recently expanded in Jordan.

Adding to concerns about oil supplies, sources reported that the Iranian leadership informed its Houthi allies to prepare to close the oil corridor in the Red Sea if the United States strikes Iranian energy infrastructure.

Analysts at IG said that technically, WTI could test the mid-80s if it remains above the key support level in the mid-70s.

Meanwhile, China's oil imports have fallen sharply during the Iran war. Over five years, China imported an average of 11.5 million barrels of oil per day. Since April, that rate has dropped to just 8 million barrels.

The speed of China's import cuts - with shipments falling to 40% of pre-Iran war levels in June - helped curb global prices and freed up oil shipments for other countries. Market watchers are questioning how the world's top oil importer achieved this drop and want to know how sustainable this demand decline is.

Michal Meidan, head of China energy research at the Oxford Institute for Energy Studies, said: 'It's the million-dollar question. There is a huge level of uncertainty because we don't fully understand what happened.' This ambiguity reflects the lack of transparency about China: its oil stockpile size is a state secret, its oil companies are opaque, and its data is incomplete.

Some analysts expect China's oil imports to eventually decline by 1 to 2 million barrels per day after the war compared to pre-conflict levels, a sharp drop in demand for a country that has led global oil consumption growth for decades.

The war has revealed the Chinese transport system's ability to operate on less fuel than previously thought, which has major implications for crude oil imports since about half is refined into transport fuel. Less clear is whether the war will significantly accelerate electric vehicle sales, especially as gasoline prices have fallen to pre-war levels after rising more than a quarter.

Sales of electric and hybrid vehicles rose to a record 62% of total new car sales in June. However, car sales this year have fallen by hundreds of thousands due to China's weak economy and the slowdown in electrification of a fleet that is still 87% gasoline-powered.

But the war seems set to accelerate the decline in diesel demand after the government launched a plan in June to electrify truck transport, aiming to electrify 80% of some busy highways by 2030. Consulting firm Rystad expects gasoline and diesel consumption in China to fall by 6.6% and 6.9% respectively, compared to its pre-war forecasts of 3.5% and 3%.

June Goh, senior analyst at Sparta Commodities, said: 'Despite the decline in demand, there will still be additional crude oil imports that China will use to fill its strategic petroleum reserves.' While structural changes, including electrification, could reduce monthly crude imports to between 8 and 9 million barrels per day once conditions normalize in the Gulf, Goh says another stockpiling campaign could push them back up to the 9.5 to 11 million barrel per day range.

During China's stockpiling campaign last year, Brent crude prices ranged between $58 and $83 a barrel, compared to the current price of about $85. Analysts say it could return to its previous level if prices fall below $70.