Brent falls 3.6% to $97.10 but holds 10% weekly gain on Red Sea risk

Oil pulled back sharply on Friday but stayed on course for a large weekly rise. Brent futures dropped 3.57% to $97.10 a barrel as of 1240 GMT, having closed above $100 the day before for the first time since May. West Texas Intermediate (WTI) fell $3.14, or 3.41%, to $89.05, still tracking a weekly gain of nearly 8%. Reuters reported the fall followed claims from Iran-aligned Houthis of attacks on two Saudi oil tankers in the Red Sea.

The driver is supply risk, not fresh demand. Rystad analyst Janiv Shah pointed to escalating Middle East tensions, US actions against Iran, increased Houthi activity in the Red Sea, and outages at the Caspian Pipeline Consortium (CPC) terminal as the forces tightening supply. President Donald Trump warned of 'major military punishment' against Iran and the Houthis, while Iran has pressed the Houthis to close the Bab el-Mandeb gateway, the second most important energy shipping route after the Strait of Hormuz.

The chart below shows Brent over recent months, against which this week's 10% swing and Friday's pullback can be read.

What this means for UK buyers

Brent does not appear on your invoice, but it feeds through to gas-linked power and transport fuel costs, so a 10% weekly move matters for anyone pricing a renewal in the coming weeks. The signal here is volatility risk rather than a settled new level: the pullback shows the market is not yet pricing a full blockade. UBS analyst Giovanni Staunovo noted that vessels are still moving through the area, so this is not a total closure as some had feared.

Watch these points as the week closes:

• Brent front-month, holding near $97.10 after topping $100
• WTI, at $89.05 and up nearly 8% on the week
• Strait of Hormuz transits, steady at three per day per Kpler data
• Bab el-Mandeb crossings, 32 on 23 July against 26 the day before
• CPC terminal status after suspected drone strikes on the Black Sea export point

Magnitude matters here. The Financial Times reported that JPMorgan analysts estimate each additional month of disruption could add roughly $7 to $8 per barrel to Brent, pushing monthly averages toward $114 if outages run for three months. S&P Global Platts framed the weekly gains as shipping-risk premium rather than a change in underlying balances.

The near-term question is whether the Bab el-Mandeb route stays open and whether US strikes on Iranian infrastructure continue. If either escalates, expect the risk premium to rebuild quickly. For buyers with renewals due, fixing into a spike locks in the premium; those able to wait may prefer to hold and reassess once transit data stabilises.