Oil Drops Below $100 As U.S.-Iran Clashes Continue, But Have Climbed More Than 10% This Week

Oil prices are pairing gains on Friday, with Brent crude dropping below $100, but have climbed more than 10% this week as clashes between the U.S. and Iran continue to escalate.

The international benchmark fell 2.85% and stood at $97.82 per barrel at 9:46 a.m. ET, while West Texas Intermediate, the U.S. benchmark, dropped 2.36% and stood just above $90 a barrel at the same time.

The jump in oil prices has rekindled inflation expectations, with the Fed funds futures now pricing a more than 80% likelihood of an interest rate hike by September.

CNBC detailed that, according to CME's FedWatch tool, the figure currently stands at 82%, a 29-point increase compared to the previous week.

While traders widely expect the central bank to keep rates unchanged in their meeting next week, maintaining it in the 3.50%-3.75% range, many more believe there will be a hike before the year ends.

Higher oil prices ripple throughout the economy by raising transportation, manufacturing and shipping costs, which often translate into more expensive goods and services for consumers. Energy also plays a significant role in food production, creating additional upward pressure on grocery prices.

The war continues in the meantime, and perspectives of a ceasefire agreement appear to be slim. President Donald Trump is currently in "revenge mode" against Iran as talks have failed to yield a lasting peace, according to a new report.

According to the Wall Street Journal, senior administration officials are saying Trump believes only continued escalation will achieve results.

Another new report by The New York Times claimed that Iran rejected a ceasefire proposal sent by the U.S. through the Iraqi prime minister on Thursday. The outlet noted that Ali al-Zaidi conveyed the proposal to Tehran after visiting Washington earlier this month.

However, he was told that Tehran was not interested in a "temporary deal" that would not address the status of the Hormuz Strait, a sticking point in negotiations that led to the current flare up.

At the same time, Trump told Axios on Thursday that he is close to making a decision on whether to launch a "massive attack" against Iran.

"I am considering a massive attack. Bigger than ever before. I am close to making a decision. We are all set for it," the president told the outlet.