Middle East Tensions Send Oil Prices Sliding Despite Weekly Gain

Oil prices took a hit on Friday, dropping over 3% as tensions in the Middle East escalated. However, despite the dip, crude futures are still on track for a weekly gain of more than 10%. Brent futures fell $3.59 to $97.10 a barrel, while West Texas Intermediate (WTI) futures dropped $3.14 to $89.05 a barrel.

The decline in prices is attributed to the ongoing US attacks on Iran and Houthi involvement in the Red Sea. Rystad analyst Janiv Shah noted that supply has become squeezed once again, driving prices up. He added that current disruption in the Strait of Hormuz appears to be nearing peak levels in March.

The Houthi's declaration of a naval blockade on Saudi Arabia and Iran's closure of the Strait of Hormuz have further contributed to the volatility in oil markets. However, analysts at JPMorgan noted that ships are still moving through the Bab el-Mandeb strait, which has alleviated some concerns about a complete blockade.