Oil prices rose on Tuesday as renewed military tensions between the United States and Iran revived concerns that the conflict could continue to disrupt crude supplies from the Middle East.

Brent crude futures gained 80 cents, or 0.88%, to $91.29 a barrel, while US West Texas Intermediate (WTI) crude rose 99 cents, or 1.15%, to $86.75 a barrel.

The gains followed a sharp rise on Monday, when Brent settled 2.7% higher and WTI advanced about 3%, briefly touching its highest level since August 21.

The latest rally came after the US and Iran exchanged direct attacks for the first time in about a month, raising fresh concerns about the security of energy infrastructure and shipping routes in and around the Strait of Hormuz.

US President Donald Trump threatened further military action against Iran, signalling that the latest exchange could trigger another escalation.

"We're going to hit them hard," a Fox News reporter quoted Trump as saying. "There will be a response."

Trump's comments came after Iran launched missiles overnight at two US air bases in Jordan in retaliation for a US attack on Iran's Larak Island. Washington said its forces had struck Iranian launchers that were firing mines into the Strait of Hormuz, a critical artery for global oil shipments.

However, markets have so far stopped short of pricing in a full-scale supply crisis, with both Washington and Tehran indicating that they do not necessarily want a return to all-out war.

A senior Iranian source described the latest exchange as a "limited and contained confrontation", while warning that Tehran would respond harshly if attacked again.

Trump, meanwhile, said the renewed strikes did not amount to a return to full-scale war, describing Iran as a "failed nation" whose economy and military had been severely weakened.

"That doesn't mean we won't smack them. We'll see what happens," he told reporters in the Oval Office.

Nuclear option ruled out

Trump also ruled out the use of nuclear weapons against Iran, calling a question about the possibility "stupid". "There's no reason for it," Trump said, arguing that Iran's military had already been defeated.

The US president has also pointed to the impact of new American economic sanctions on Iran, saying they were placing significant pressure on the country's economy.

Earlier, Trump posted two AI-generated videos purporting to show explosions engulfing Iran's main oil export terminal on Kharg Island, accompanied by a message saying: "Kharg island being blown to smithereens!!!"

No such attack took place, however, and Iran dismissed the post as "laughable."