Oil prices edged higher on Monday after fresh exchanges of fire between the US and Iran renewed concerns over the security of shipping through the Strait of Hormuz, highlighting the fragility of an interim peace agreement reached earlier this month.

Brent crude futures rose 47 cents to $72.46 a barrel, while US West Texas Intermediate (WTI) crude gained 80 cents to $70.03 a barrel in early trading. The gains followed four days of military exchanges that disrupted shipping in the strategic waterway, through which around one-fifth of the world's oil supply passes.

The latest rise came after oil prices fell sharply last week on hopes that the 60-day ceasefire agreement between Washington and Tehran would restore normal tanker traffic through the Strait of Hormuz. However, those expectations were dented after Iran struck a vessel in the strait on Thursday, prompting the suspension of a UN-led maritime evacuation operation and slowing the recovery in shipping activity.

Analysts said the market remains caught between hopes of improving oil flows and the risk of further escalation.

Despite the latest rebound, crude prices remain well below the four-year highs seen in April, when Brent topped $126 a barrel.