Oil prices rose 2% on Tuesday to their highest level in four weeks as the United States reimposed its naval blockade on Iran and the two countries escalated attacks in the Strait of Hormuz, increasing uncertainty about energy flows.

Brent crude futures reached $84.98 a barrel.

Brent crude futures rose $1.68, or 2%, to $84.98 a barrel by 0051 GMT, while U.S. West Texas Intermediate crude rose $1.65, or 2.1%, to $79.79 a barrel. Brent jumped 9.6% in the previous session, its biggest daily gain since May 2020, and oil prices are currently at their highest since the two countries signed a memorandum of understanding on June 17 to end the war.

The UAE Defense Ministry announced in the past hours that two UAE-flagged tankers were targeted by two Iranian cruise missiles in the southern corridor of the Strait of Hormuz inside Omani territorial waters, killing an Indian sailor and injuring eight crew members.

Meanwhile, U.S. President Donald Trump told reporters that the United States had reimposed its blockade on Iranian shipping, adding that he wants the U.S. to charge fees for protecting countries it assists in the Strait of Hormuz.

In the same vein, gold fell on Tuesday to a two-week low as the conflict between the United States and Iran in the Gulf sent oil prices soaring and fueled inflation concerns.

Spot gold fell 0.2% to $3,993.83 an ounce by 0110 GMT after losing about 3% in the previous session, its biggest daily percentage decline in over a month. U.S. gold futures for August delivery settled at $4,000.70.

Among other precious metals, spot silver fell 1.2% to $56.98 an ounce after hitting a two-week low earlier. Platinum fell 1% to $1,589.35, and palladium fell 0.4% to $1,242.54.

The U.S. military continued its strikes on Iran for the third consecutive night on Monday, and two tankers came under fire in the Strait of Hormuz after U.S. President Donald Trump announced that Washington would resume its blockade on Iranian shipping in the Gulf.

Oil futures hit their highest since mid-June after jumping about 9% in the previous session, while U.S. Treasury yields and the dollar rose as the conflict between the United States and Iran renewed at the start of the week.

Investors are closely watching U.S. Consumer Price Index data for June due later today for new signs on inflation and the path of the Federal Reserve's interest rate policy, with attention also on Producer Price Index data and Fed Chairman Kevin Warsh's first semiannual testimony before Congress this week.

Federal Reserve Board Governor Christopher Waller said on Monday that the central bank may need to raise interest rates "in the near term" if upcoming data shows inflation remains well above the 2% target, describing monetary policy as being at a "crossroads."

Traders stepped up bets on a U.S. interest rate hike in September, with the CME FedWatch tool showing expectations of about 78% for a hike, up from 57% a week ago.