NEW YORK: The main international oil contract Brent North Sea fell back under US$100 Friday (Jul 24) after surging past the key milestone the previous day on escalating Middle East strikes, helping US and European stock markets stabilise.

Brent dropped about four per cent to under US$97 a barrel, having soared seven per cent Thursday. The key US contract, West Texas Intermediate, declined more than three per cent after having gained more than six per cent on Thursday.

The sizeable jumps had come after Yemen's Houthi rebels struck oil tankers in the Red Sea, potentially opening a new front in the Middle East war.

Despite the United States launching fresh strikes Friday on Iran, there was relief on markets that some ships were still able to pass through the Bab al-Mandeb Strait, a crucial passage into the Red Sea. 

"Ships with Saudi crude are still crossing ... so for now, it is not a full blockade, reducing a bit the risk of an even tighter oil market," Giovanni Staunovo, a commodities analyst at Swiss bank UBS, told AFP.

A Houthi spokesman said Friday that the rebels were not blocking traffic through the strategic strait.

On Wall Street, both the Dow and S&P 500 rose, while the Nasdaq retreated again, with semiconductor shares enduring another round of selling.

Angelo Kourkafas of Edward Jones described markets as buffeted by uncertainty over unpredictable geopolitical events and questions about how the Federal Reserve will weigh the latest jump in oil prices. 

At the same time, "the bar is set high and there is also some skepticism about the sustainability" of this week's lofty corporate earnings, Kourkafas said.

David Morrison at Trade Nation said expectations that the US Federal Reserve could hike interest rates at its meeting next week have risen from 13 per cent last week to 30 per cent currently.

"Perhaps more seriously, the CME's FedWatch Tool shows a 90 per cent probability of at least one 25-basis point rate hike before year-end," he said.

Besides the Fed, next week's schedule includes another heavy calendar of quarterly results featuring tech giants such as Amazon and Apple, as well as major industrial players including Boeing and Ford.

With tech stocks not as predominant in Europe, that region's main stock markets advanced on Friday.

Asian stock markets followed the sell-off Thursday on Wall Street as world markets were battered by a perfect storm of the resurgent Middle East war, the spike in oil prices and concerns about the artificial intelligence boom.