NEW YORK: Oil prices leapt more than $3 on Friday, with Brent on track for its highest weekly gain since April, after the U.S. tightened its sanctions program against Russian crude exports, raising supply concerns in an already tight market.
Brent futures rose $3.21, or 3.7%, to $89.21 per barrel as of 10:58 a.m. EDT (1458 GMT). US West Texas Intermediate (WTI) crude gained $3.11, or 3.8%, to $86.02 a barrel, after earlier breaking the $4 barrier.
On Thursday, the U.S. imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine.
Russia is the world’s second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply.
Despite fluctuations through the week in both crude benchmarks, Brent was set for a weekly gain of 5.4%, its highest such increase since April. WTI was set to climb about 3.8% for the week, after both surged on Monday.
That uptick was driven by the potential for disruptions to Middle Eastern exports after the weekend attack by group Hamas on Israel threatened a wider conflict.
Iran’s Foreign Minister Hossein Amirabdollahian on Friday discussed the Israeli conflict with Hamas with the head of the powerful Tehran-backed Lebanese armed group Hezbollah, which has launched its own cross-border attacks on Israel.
“The market is concerned because we don’t know what that means. And could it impact oil?” said Phil Flynn, an analyst at Price Futures Group.
While oil flows have not yet been affected by the conflict, analysts and market observers are assessing how it could have an impact on the larger oil complex.
This week, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world’s biggest oil importer.
“Supply side issues remained the focus in the crude oil market,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement.
Oil prices also shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports.
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