New York's main contract, light sweet crude for delivery in December, gained four cents to $86.36 a barrel in the afternoon and Brent North Sea crude for December delivery added 27 cents to $109.88.
Israel's military launched operations Wednesday with the killing of a top Hamas commander followed by what Palestinians said were at least 60 Israeli air strikes. The toll in Gaza Thursday rose to 11 dead and at least 100 wounded.
The attacks provoked militants to warn the Jewish state that it had opened "the gates of hell", while Egypt said it was recalling its ambassador to Israel in protest.
"Crude oil prices rose... after Israel launched an offensive against Palestinian militants in Gaza," Phillip Futures said in a report.
The United Nations will meet in an emergency session later Thursday to try to defuse tensions in the region.
Israel however said this was only the start of an operation targeting militant groups in Gaza, which comes as it prepares for general elections in January.
A weekly report late Wednesday by the American Petroleum Institute showed crude stocks in the world's largest oil consumer rising 1.3 million barrels last week, indicating weak demand.
This was less than analyst projections of a 1.9 million-barrel gain, but was not enough to reassure traders' fears of slipping US energy demand.