Oil prices leapt more than $3 on Friday after the U.S. tightened its sanctions programme against Russian crude exports, raising supply concerns in an already tight market, with global inventories forecast to decline through the fourth quarter.
Brent futures rose $3.30 to $89.30 per barrel as of 1311 GMT. US West Texas Intermediate (WTI) crude gained $3.32 to $86.23 a barrel, after earlier breaking the $4 barrier.
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 more than 5%, while WTI was set to climb roughly 4% for the week, after both surged on Monday.
“(A) geopolitical risk premium still lingers around the corner that is likely to support oil prices in the short-term,” said Kelvin Wong, senior markets analyst at OANDA in Singapore.
The market was most concerned about supply constraints from the Middle East and Russia, said Wong.
“There has been no sign so far that the leading oil producing countries in the region will become directly involved in the military conflict, which would threaten to considerably restrict the crude oil output of these countries,” they said.
Also on Thursday, 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.
“Sentiment was also boosted after OPEC said it expects crude stockpiles to slump by 3 (million barrels per day) this quarter. That assumes that there are no further supply disruptions emanating from the Israel-Hamas war,” Hynes said.
Oil prices also shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports.
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