Oil prices retreated from six-week highs early on Friday even as Middle East fighting continues, with Iran and the US continuing attacks and Houthi militants threatening shipping in the Red Sea.
West Texas Intermediate crude oil for September delivery was last down $2.60, or 2.8%, to $89.59 per barrel, while September Brent oil was down $3.12, or 3.1%, to $97.57.
The drop comes even as conflict continues to block exports from the Persian Gulf producers who supplied 20% of daily oil demand prior to the Feb. 28 start to the war on Iran. The US continued attacks on Iran, with the Guardian reporting President Donald Trump may heighten strikes, saying he is considering "a massive attack" on the country.
As well, Houthi militants on Thursday attacked ships in the Red Sea carrying Saudi crude, threatening to shut in shipments through the sea, adding to the supply shock that followed Iran's closure of the Strait of Hormuz at the start of the war.
Only 15 ships have moved through the Strait in the past day, according to hormuzstraitmonitor.com, 17% of prewar traffic, while Reuters reported shipping through the Bab el-Mandeb Strait, where the Red Sea joins the Indian Ocean, fell to two ships on Thursday, down from 32 a day earlier.
Drone attacks on ships in the Black Sea loading oil from the Caspian Pipeline Consortium is further cutting into supply.
"Crude oil closed above 100 dollars a barrel for the first time since May (on Thursday), with Brent up about 7% to 100.69 and WTI near 92, leaving oil up roughly 38% this month. The bid reflects Houthi attacks on Red Sea tankers, President Trump's threat of a 'massive attack' on Iran, and strikes on the Caspian Pipeline Consortium terminal that handles most Kazakh crude," Saxo Bank wrote.