Oil Prices Fall but Set for Weekly Gain Amid Middle East Tensions

Oil prices fell on Friday but remain set for a weekly gain due to escalating tensions in the Middle East. Brent futures dropped $3.59, or 3.57%, to $97.10 a barrel at 1240 GMT after settling above $100 in the previous session. West Texas Intermediate (WTI) futures were down $3.14, or 3.41%, at $89.05 a barrel.

Rystad analyst Janiv Shah attributed the price increase to supply disruptions caused by US attacks on Iran and Houthi involvement in the Red Sea. Current disruption levels are nearing peak levels seen in March, according to Shah. The US President has threatened 'major military punishment' for Iran and its allies after recent strikes.

Analysts at JPMorgan predicted that each additional month of disruption would add around $7 to $8 a barrel to Brent prices, potentially lifting monthly averages to $114 a barrel if disruptions persist for three months. However, a UBS analyst noted that ships are still moving through the Bab el-Mandeb strait, suggesting it's not a complete blockade.