Here's a look at what happened in oil markets in the week of July 27-31 and what the focus will be in the days to come.

OVERVIEW: Oil prices are on track for a monthly jump of about 20% as the Iran war expands beyond the Gulf and threatens other key shipping routes, squeezing crude supplies and keeping product markets tight. On Friday, Brent crude, the global oil benchmark, was trading around $90 a barrel, while West Texas Intermediate futures were around $85 a barrel.

MACRO: The Federal Reserve left interest rates unchanged at its July meeting, with Chairman Kevin Warsh offering little clarity on the central bank's next policy move. Markets are now pricing in a 63% chance of a rate hike in September, according to CME's FedWatch tool. Meanwhile, the latest U.S. data showed the inflation gauge tracked by the Fed cooled in June, though the easing might be temporary as renewed hostilities in the Middle East raise oil prices.

GEOPOLITICAL RISKS: The latest rally in prices was triggered by renewed U.S. strikes on Iranian targets in response to attacks on American forces in Jordan earlier this week. The conflict is quickly spreading beyond the Gulf, with some vessels now avoiding the Red Sea's southern export route via the Bab al-Mandeb Strait and instead diverting to an Egyptian port on the Mediterranean and the Suez Canal. A drone attack at Egypt's Damietta port has also raised fresh concerns. "Given this situation and the absence of clear de-escalation signals, oil prices are likely to remain elevated for the time being," analysts at Commerzbank say. "However, recent weeks have demonstrated that even tentative progress in U.S.-Iran relations can exert substantial downward pressure on prices."

SUPPLY AND DEMAND: Oil flows through the Strait of Hormuz--one of the world's most important energy chokepoints--remain sharply reduced. Average weekly crude shipments fell to 2.57 million barrels a day in the week beginning July 20, about 61% below the 6.60 million barrels a day recorded two weeks earlier, according to Kpler.

The disruption to crude flows is increasingly spilling over into refined fuel markets, and Russia extended a temporary ban on diesel exports by one month until Sept. 1. At the same time, U.S. crude inventories dropped by 7.2 million barrels in the latest week to their lowest level in nearly eight years, according to the Energy Information Administration, adding to concerns over tightening supply.

WHAT'S AHEAD: Key members of the OPEC+ group are set to meet virtually on Sunday and discuss production quotas. According to most market watchers, producers will likely agree to another output hike of 188,000 barrels a day. Still, "the group's decisions on oil production remain moot at present given that the conflict in the Middle East is constraining OPEC+ members' ability, not willingness, to expand exports/production," analysts at Capital Economics said. "This is particularly the case for Saudi Arabia, which appears to have the largest amount of spare capacity but is now having to contend with the Houthi blockade as well as Hormuz-related disruption."

Investors will also be watching China's July trade data next week for signals on crude demand. Imports are expected to have risen slightly after flows through the Strait of Hormuz briefly moved closer to normal levels in June.