Oil futures experienced a dip on Friday, with Brent crude falling 3.57% to $97.10 a barrel and West Texas Intermediate (WTI) down 3.41% to $89.05. Despite these daily declines, both benchmarks are set for substantial weekly gains, driven by disruptions to energy shipments in the Red Sea and concerns over potential further escalation of the U.S.-Israeli conflict involving Iran.
The Brent contract was on pace for a more than 10% advance for the week, while WTI was positioned for an approximately 8% rise. This upward pressure on prices follows Iran-aligned Houthi forces' claims of striking two Saudi oil tankers in the Red Sea, an incident that pushed Brent futures above $100 for the first time since May in the previous session.
Analysts attribute the price surge to a confluence of factors, including ongoing U.S. actions against Iran, increased Houthi involvement in the Red Sea, and disruptions to energy infrastructure. Rystad analyst Janiv Shah noted that the current disruptions in the Strait of Hormuz are nearing the peak levels observed in March. The Red Sea's Bab el-Mandeb strait, a critical route for energy shipments, is experiencing increased commodity vessel transits.
U.S. President Donald Trump has vowed significant military retaliation against Iran and its Houthi allies following the Red Sea attacks. Reports suggest Iran had been encouraging the Houthis to disrupt traffic through the Bab el-Mandeb strait, which is considered the second most important energy shipping route after the Strait of Hormuz. The Houthis had previously declared a naval blockade on Saudi Arabia, a move that had prompted the kingdom to reroute oil via pipeline to circumvent potential blockades at Hormuz.
Despite the heightened tensions, data indicates that vessel transits through both the Strait of Hormuz and the Bab el-Mandeb strait have remained active, suggesting that the disruptions have not yet resulted in a complete blockade. JPMorgan analysts predict that each additional month of oil supply disruption could add between $7 and $8 per barrel to Brent prices, potentially pushing average monthly prices to around $114 if disruptions extend for three months.
In related developments, Russia reported striking three Ukrainian ports, targeting infrastructure critical to Kyiv's armed forces. Separately, Kazakhstan's energy ministry announced temporary production reductions after suspected Ukrainian drone attacks led to the closure of the country's main Black Sea export terminal.