Oil prices edged higher as risks around the U.S.-Iran conflict persisted despite Middle East crude exports continuing to recover toward prewar levels.

December Brent crude futures gained 2% to $99.98 a barrel on Thursday, while West Texas Intermediate futures were up 1.1% to $89.38 a barrel. Both contracts traded lower initially before rebounding.

Major banks have raised their oil-price forecasts as the Iran conflict and the risk of renewed supply disruptions remain unresolved. A Wall Street Journal survey of projections from banks including Goldman Sachs, J.P. Morgan and Morgan Stanley put Brent at an average of $90.22 a barrel in the fourth quarter and WTI at $85.47, up from previous estimates of $78.92 and $74.62, respectively.

Meanwhile, Middle East crude exports have rebounded to 17.5 million barrels a day on a 10-day average, or 98% of prewar levels, J.P. Morgan analysts said. The recovery has been supported by restored flows through Saudi Arabia's East-West pipeline and greater use of alternative export routes.

Excluding Iran, at least 16.5 million barrels a day of crude left the Middle East Gulf region in September, matching its prewar average, according to Kpler. Around 40% of those exports bypassed the Strait of Hormuz, up from 17% before the war, with 23% loading outside the strait along the Gulf of Oman and another 17% leaving through the Red Sea. The remaining 60% crossed Hormuz, much of it using shuttle tankers and ship-to-ship transfers.

Physical oil markets remain tight despite the recovery in flows through Hormuz, according to HSBC. Kim Fustier, senior global oil and gas analyst at HSBC, said recovering Middle East crude exports don't mean the oil market has returned to normal. Dated Brent, a benchmark reflecting crude for physical delivery, settled around $121 a barrel Wednesday, according to Argus Media, well above futures prices.

MUFG analysts similarly said recovering Gulf crude flows should limit upward pressure on oil prices, but persistent fuel shortages, uncertain access through the Strait of Hormuz and regional security risks are likely to keep physical markets tight. U.S.-Iran negotiations have made little progress toward fully reopening the strait, they said.

U.S. crude inventories also unexpectedly rose last week. Commercial crude stocks increased by 900,000 barrels to 427.3 million barrels in the week ended Sept. 25, according to the U.S. Energy Information Administration, while analysts surveyed by The Wall Street Journal had expected a 200,000-barrel decline. Refinery utilization fell to 92.5% from 94% a week earlier. Gasoline stocks fell by 1.7 million barrels and distillate inventories dropped by 2.3 million barrels, leaving both well below their five-year seasonal averages.