Adds latest prices

By Scott DiSavino

July 14 (Reuters) - Oil prices rose about 2% to a one-month high on Tuesday after the U.S. reimposed a naval blockade on Iran and as renewed attacks between Washington and Tehran heightened concerns over energy flows through the Strait of Hormuz.

Before the Iran war about 20% of global oil supplies flowed through the strait.

Keeping price gains in check, however, were concerns that those higher energy prices could boost inflation and ultimately reduce economic growth around the world and demand for oil.

Brent crude futures LCOc1 were up $1.72, or 2.1%, at $85.02 per barrel at 10:46 a.m. EDT (1446 GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 rose $1.05, or 1.3%, to $79.19.

That put Brent on track for its highest close since June 12 and WTI on track for its highest close since June 15. It also kept Brent in technically overbought territory for a second day in a row for the first time since March.

"The resumption of attacks between the U.S. and Iran is accelerating this week and will likely continue given the additional U.S. bombing overnight that followed reinstatement of a U.S. blockade of the Strait of Hormuz," analysts at energy advisory firm Ritterbusch and Associates said in a note.

Iran fired ballistic missiles at a U.S. air base in Jordan on Tuesday and the U.S. attacked Iranian targets for five hours in a battle for control of the Strait of Hormuz.

U.S. forces launched waves of attacks for the third successive night after Iran said on Saturday it was closing the strait, prompting U.S. President Donald Trump to reinstate a blockade of Iranian shipping and propose charging a 20% fee to guard the vital waterway.

The strikes have increased doubts that a memorandum of understanding (MoU) signed last month will lead to a permanent halt in the war, which has disrupted global energy supplies and raised fears of a rise in inflation across the world.

In early July, when it looked like the ceasefire between the U.S. and Iran would hold, futures for Brent and WTI were trading near levels seen before the U.S. and Israel started bombing Iran on February 28.

INFLATION WORRIES

U.S. consumer inflation slowed more than expected in June, data showed on Tuesday, but that will probably not rule out an interest rate increase from the Federal Reserve this year, with the conflict in the Middle East still unresolved.

Higher interest rates raise the cost of borrowing for consumers, which can slow economic growth and demand for oil.

In Germany, the two-year government bond yield hit its highest since July 2024 on Tuesday as the Iran conflict stoked fears that higher energy prices could boost inflation and interest rates.

AROUND THE WORLD

In Kazakhstan, oil and gas condensate production fell by 8.4% year-on-year to 45.7 million metric tons in January to June, the country's Energy Minister Yerlan Akkenzhenov said on Tuesday.

In Yemen, the Iran-backed Houthi group fired missiles at Saudi Arabia after accusing the kingdom of bombing an airport under its control on Monday.

"If the Houthis extend their attacks to Saudi's crude products in the Red Sea, it could put (further) uncertainties on crude flows from the region," Simon Wong, a portfolio manager at Gabelli Funds, said in a note.

Meanwhile, Ukraine's military said on Tuesday that it struck two Russian oil refineries in the Bashkortostan and Krasnodar regions overnight. Recent Ukrainian attacks on Russia's energy infrastructure have caused Moscow to curtail diesel exports, boosting diesel prices around the world.

In the U.S., the rise in diesel futures HOc1 has boosted the 3-2-1 CL321-1=R and diesel HOc1-CLc1 crack spreads, which measure refining profit margins, to record highs, according to LSEG data.