Oil prices climbed sharply following a report from an Iranian news agency stating that Iran struck "hostile targets" in the Strait of Hormuz.

Both US and global benchmark crude futures gained over 1% in after-hours trading on Thursday. The move extended gains from the regular session, where West Texas Intermediate (WTI) crude rose for the first time in three days. That initial uptick came as mounting evidence suggested a potential agreement between Iran and Oman would not lead to a full resumption of shipping through the strategic waterway.

Earlier Iranian media reports indicated Tehran would seek to bar US and Israeli vessels from the Strait and demand compensation from hostile nations before allowing them passage. Those reports had already pushed oil to session highs, as traders assessed it meant export restrictions from the Persian Gulf would remain in place for the near term.

The situation escalated further when the Fars news agency reported the strike on hostile targets. In response, European natural gas futures surged as much as 12%, reflecting the heightened risk to gas tankers in the region.

Even before the latest developments, the outlook for a negotiated settlement had been clouding. While Iran stated a deal on the proposed waterway was in its final stages, it insisted the US was not a party to its agreement with Oman. Tehran also suggested that normal navigation through the Strait of Hormuz would depend on the US lifting a blockade on Iranian ports.

"The longer this drags out, the higher the probability oil prices will move back up," said Dennis Kissler, a senior vice president of trading at BOK Financial Securities Inc., noting that crude traders remain focused on the progress of potential deals.

WTI crude for September delivery briefly touched $78.33 per barrel, after settling at $77.29 in New York, a 2.8% gain. Brent crude for October delivery rose to a session high of $83.49 per barrel, following a 3.8% gain to settle at $82.49.