Oil prices rose more than 4% at settlement on Friday, hitting their highest levels in over a month following a weekend of intense US strikes on Iran, claims from Iran that the Strait of Hormuz is closed to traffic once again, and Iranian strikes on five US allies in the region, said media reports.

Brent crude futures rose $3.87, or 4.59%, to settle at $88.10 a barrel, while West Texas Intermediate (WTI) crude futures climbed $3.54, or 4.48%, to $82.49 a barrel.

Both benchmarks reached their highest levels since mid-June and have gained about 16% this week. Brent is on track for its third consecutive weekly gain, while WTI is headed for its second.

"The market is reacting to the increasing hostilities between Iran and the US that have culminated this week with nightly attacks on Iranian infrastructure and retaliation by Iran on ​its neighbors' infrastructure," remarked Andrew Lipow, president of Lipow Oil Associates. 

"If more tankers come under fire and become damaged, ​we're going to see oil prices continue to move up as shipowners simply refuse to enter the Persian Gulf," he told Reuters.

Saudi Arabia has diverted more than 70% of its ⁠normal daily crude exports to the Red Sea port of Yanbu since the beginning of the war. Shipments from Yanbu averaged 4 million barrels per day in recent weeks, up from around 973,000 bpd in the same period last year.

"Given that so much of Saudi Arabia's exports have been redirected to the ‌port of Yanbu via the East-West Pipeline to avoid Hormuz, any such development is a threat indeed," Tamas Varga, analyst at PVM Oil Associates, wrote in a note.

Following the spurt in Brent prices, the US is witnessing a rise in oil drilling activity, reported leading energy portal Oilprice.

The total number of active drilling rigs for oil and gas in the US rose this week, according to new data that Baker Hughes published on Friday, bringing the total rig count in the US to 588, up 44 from this same time last year.

The number of active oil rigs rose by 7, reaching 452 during the latest reporting period, according to the data. This is 30 above this same time last year. The number of gas rigs stayed the same, at 126, which is 9 more than this time last year. Miscellaneous rigs stayed at 10, stated the report.

“Clearly, the risk is that this escalates to levels seen early in the war, where neighbouring countries and their energy infrastructure are also targeted,” ING's commodities strategists Warren Patterson and Ewa Manthey wrote in a note early on Monday.

“Escalation has slowed vessels transiting the strait to a trickle, renewing concerns over oil supply tightness through the third quarter,” the strategists said.

While oil was surging due to the latest escalation, equity and bond markets fell in Monday trade in Asia and Europe, as the markets started pricing in again protracted disruption at the Strait of Hormuz.