Oil prices hit a six-week high on Thursday as oil rigs in the Gulf of Mexico were evacuated ahead of a storm, while an incident with a British tanker in the Middle East highlighted tensions in the region.
Brent crude futures were up 32 cents at $67.33 a barrel by 1153 GMT. Earlier in the session they hit their highest since May 30 at $67.65, after ending Wednesday up 4.4%.
U.S. West Texas Intermediate crude futures were up 25 cents at $60.68 a barrel, having touched their highest since May 23 at $60.94. They gained 4.5% in the previous session.
A day after Iran warned Britain would face "consequences" over the seizure of an Iranian oil tanker, three Iranian vessels tried to block the passage of a British ship run by BP through the Strait of Hormuz, the British government said. They withdrew after warnings from a British warship.
"What happened was partially expected. We pointed out last week that Iran was likely to do something of the sort," Petromatrix oil analyst Olivier Jakob said.
"They might have created a little bit of disturbance, but nothing came out of it. For now we are in the process of intimidation and psychological warfare ... To have a strong price reaction you need something to really happen."
Oil prices were also supported by a fall in the dollar after Federal Reserve Chairman Jerome Powell bolstered expectations for U.S. interest rate cuts.
"Powell cited trade uncertainties that surround economic growth as a potential reason to cut interest rates. No wonder stocks jumped and the dollar weakened, providing extra boost for oil prices and easing fears of demand growth destruction," Commerzbank analysts said in a note.
A decline in U.S. inventories also boosted oil prices. U.S. crude stocks fell by 9.5 million barrels in the week to July 5, the Energy Information Administration (EIA) said, more than the 3.1-million-barrel draw analysts had expected.
U.S. oil producers on Wednesday cut nearly a third of their output in the Gulf of Mexico ahead of what could be one of the first major storms of the Atlantic hurricane season.
However, oil prices gave up some gains as OPEC forecast on Thursday that world demand for its crude would decline next year as rivals pumped more, pointing to the return of a surplus despite an OPEC-led pact to restrain supplies.
(Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson)