Oil Prices Plummet But Still Set for Weekly Gains Amid Red Sea Tensions

Oil prices dropped nearly 4% on Friday after briefly topping $100 per barrel for the first time since May, but are still set to rise by around 10% this week due to ongoing concerns about disrupted energy flows in the Red Sea and tensions between the US and Iran.

The Houthis, aligned with Iran, said they had struck two Saudi oil tankers in the Red Sea, prompting concerns about the security of oil shipments through the region. Despite this, analysts noted that ships are still moving through the Bab el-Mandeb strait, which connects the Red Sea to the Gulf of Aden.

West Texas Intermediate (WTI) futures fell by 3.42% to $89.04 per barrel, while Brent futures dropped by 3.96% to $96.70 per barrel. The US President Donald Trump has promised 'major military punishment' for Iran and its allies after the strikes in the Red Sea.

Analysts at JPMorgan have predicted that each additional month of disruption to oil supply would add around $7 to $8 per barrel to Brent prices, lifting monthly average prices to around $114 per barrel if disruptions extend to three months.