An escalation of the U.S./Iran war is expected after the U.S. midterms: File Image/Pixabay

Evidence that the U.S. was preparing to escalate its war against Iran caused jittery traders on Thursday to boost crude prices by over 4 percent – despite oil flows through the Strait of Hormuz returning to prewar levels.

Brent settled up 4.4 percent at $102.31 per barrel, while West Texas Intermediate settled up 2.7 percent at $92.87 per barrel.

After U.S. president Donald Trump told aides he expects to resume bombing the Islamic republic following the U.S. midterm elections next month, Marine Corps ships and up to 10,000 additional troops were deployed to the Middle East.

Scott Modell, CEO of Rapidan Energy and a former CIA officer, told media, “The president I think is going to escalate after the midterms; we keep hearing that the Iranians are going to escalate into the midterms.”

Crude trading on Thursday was also influenced by China: four people familiar with the matter told media that Chinese refiners had suspended exports of oil products beyond Hong Kong and Macau until further notice.

This prompted Giovanni Staunovo, analyst at UBS, to remark, "The Chinese export ban suggests concerns about domestic product availability," and he added that it’s unclear whether the measures will support higher crude imports after recent drawdowns in Chinese crude and fuel stocks.

The initiative comes in the wake of Russia banning exports through October and president Vladimir Putin stating that diesel will not be supplied to global energy markets until sanctions against Moscow are lifted.

With diesel prices approaching catastrophic levels for many commercial consumers, the European Union's energy task force will meet on Friday to discuss a potential release of diesel stockpiles.

In other oil news on Thursday, Hardeep Singh Puri, oil minister for India, told reporters that “There's no supply shortage in the world; the world has 104 million barrels of oil a day… It's only that the supply routes are choked and freight charges and others are high, and that's higher prices.”

Puri added that global oil consumption is running below available supply, with demand at 94 million barrels per day (bpd), versus 104 million bpd of supply.