AITA for asking for space from my friend because she offended my flatmate

I (26F) hosted a birthday party this weekend at my flat: Things were going well until late into the night when everyone was very drunk and someone put on "Mr. Brightside", and P (25F) (one of my closest friends) starts yelling "white people!" repeatedly at the top of her lungs, trying to make a joke about the meme that all white ppl love the song (for context she is white). But my flatmate, O (23F) got irritated and said "I'm the only non-white person in the room", and the vibe got really awkward.

P tried to apologize to O and explain the joke (I missed bc I was in the bathroom) but by the time I came back O was mad and P was extremely anxious and told me that O had told her to "take a step back". I tried to diffuse the situation and get P to dance away from O but she just kept looking worried. I then chatted to O about something else, but then P came over again to explain herself and to make sure O was okay - O said "I don't have anything to say but it feels like you do" and P tried to explain the meme and didn't believe O when she said she was fine and it seemed like the situation was getting really heated so I asked P to give us a minute. O then complained to me about how P was crying and I reassured her that she didn't do anything wrong by calling her out, and that she didn't owe P the "emotional labour" of comforting her when P made things awkward in the first place.

I asked O if she wanted everyone to leave, and she said that wasn't necessary, but people were already filtering out anyway, so I went into the garden to ask P and the last stragglers to leave. I could tell I was upset, but I kinda shut down and didn't talk to her bc I was embarrassed by her behavior, felt like she put me in the middle of challenging situation with my own flatmate, didn't want to get into a fight while I was drunk, because I frankly didn't want to comfort her when I felt like she ruined the vibe in the first place and made it worse by centering her own feelings instead of O's. After all, O is my friend and especially because love living with her, I want to have her back and not make her feel uncomfortable in her own home.

P and I called today and I said I needed some space (also bc this isn't the first time she's put her foot in her mouth or made an ironic joke about race or said something uncomfortable), and she was hurt because she felt like her entire character and our friendship was being disregarded because of this 1 instance. She's also on the spectrum and said she has a really hard time reading social cues and she was just trying to make things better.

AITA because I asked for space from P, even though she apologized? Or am I being too hard on her?