Oil futures are set for strong weekly gains due to fears of disrupted energy flows in the Red Sea amid escalating US-Iran tensions.
Oil futures retreated but remained on course for strong weekly gains amid fears of disrupted energy flows in the Red Sea and escalating conflict involving the US, Israel, and Iran, reports CNBC News.
Brent crude fell US$3.05, or 3 percent, to $97.64 a barrel after topping $100 in the previous session for the first time since May. The contract was still set for an 11 percent weekly rise. West Texas Intermediate dropped $2.62, or 2.8 percent, to $89.53 a barrel, on track for an 8.5 percent weekly gain.
The surge followed claims by Iran-aligned Houthis that they struck two Saudi tankers in the Red Sea. US President Donald Trump vowed 'major military punishment' for Iran and its allies after the attacks. Analysts said the short-term outlook remained bullish as key supply routes are surrounded by war.
Iran has pressed the Houthis to close the Bab el-Mandeb gateway if US strikes continue. The Houthis also declared a blockade on Saudi Arabia, which has diverted oil via pipeline to bypass Iran's closure of the Strait of Hormuz. Ship-tracking firm Kpler said only one tanker crossed Hormuz on Thursday, the lowest since May 7.
JPMorgan analysts estimated that each month of disruption could add $7 to $8 a barrel to Brent, potentially lifting average prices to $114 if interruptions last three months. Meanwhile, Russia said its forces struck three Ukrainian ports overnight, while Kazakhstan reported reduced output after suspected drone attacks closed its Black Sea terminal.
