Escalating tensions with Iran have increased the likelihood of oil supply disruptions.
Oil prices jumped more than $8 a barrel on Friday after Israel announced an attack on Iran, raising concerns about escalating tensions in the Middle East that could impact oil supplies. The gains were then pared.
Brent crude futures rose $4.60, or 6.63%, to $73.96 a barrel.
US West Texas Intermediate crude rose $4.65, or 6.83%, to $72.69 a barrel by 10:33 GMT.
Bombing nuclear facilities and other military sites
A military source announced that Israel bombed nuclear facilities and other military sites in Iran at dawn on Friday.
The Israeli source told reporters: "The strikes we are carrying out are dozens of strikes targeting military targets and others linked to the nuclear program in various regions of Iran."
The source indicated that the Israeli military believes Tehran has the capability to strike the Jewish state "at any moment."
A sixth round of talks will be held next Sunday
US and Iranian officials are expected to hold a sixth round of talks on Tehran's uranium enrichment program in Oman on Sunday, according to officials from both countries and Omani mediators.
Trump has repeatedly threatened to launch strikes on Iran if nuclear talks fail to reach an agreement. Tehran, which insists its nuclear activity is for peaceful purposes, has said it will respond to the attacks by striking US bases in the region.
Waterway navigation
Escalating tensions with Iran have increased the likelihood of oil supply disruptions.
UKMTO warned on Wednesday that rising tensions in the Middle East could escalate military activity, potentially impacting shipping in key waterways.
JP Morgan indicated that oil prices could rise to between $120 and $130 per barrel if the Strait of Hormuz were closed, a scenario the bank considered dangerous but low-probability.
"We are still higher than we were two days ago, as some speculators prefer to remain on the sidelines amid the uncertainty," said Giovanni Staunovo, an analyst at UBS.
US Special Envoy Steve Witkoff plans to meet with Iranian Foreign Minister Abbas Araqchi in Oman on Sunday to discuss Tehran's response to the US proposal for a nuclear agreement.
The International Atomic Energy Agency's Board of Governors declared on Thursday that Iran had violated its nuclear non-proliferation obligations for the first time in nearly 20 years.