In Brief: Oil drops 5pc on Iran worries

Oil tumbled 5 per cent on Friday, erasing the previous session’s gains, as Yemen’s conflict looked less likely to disrupt Middle East crude shipments, and investors turned their focus to talks for a potential Iran nuclear deal that could put more supply on the market.

Oil prices still notched their second straight weekly gain, boosted by the dollar’s weakness in recent sessions. US crude had its biggest weekly gain in more than a month. US crude and global benchmark Brent oil spent most of the session in a tight range, down about 2 per cent. But they fell sharply in late trading.

On Thursday, oil jumped 5 per cent on fears that the conflict in Yemen could disrupt cargoes on the neighbouring Bab el-Mandeb Strait, where 3.8 million barrels per day (bpd) of crude and oil products flow.

Yemen’s Houthi rebels made broad gains in the country’s south and east despite a second day of Saudi-led air strikes meant to check the Iranian-backed militia’s efforts to overthrow President Abd-Rabbu Mansour Hadi.

But the oil market paid scant attention to the conflict, and focused instead on Iran.

Tehran and major powers pushed each other for concessions ahead of an end-of-March deadline for a preliminary nuclear deal that could lift sanctions on the OPEC nation’s oil exports.

Tehran is keen to recover market share lost under US-led sanctions that have restricted its crude exports to just 1 million bpd from 2.5 million bpd in 2012.