Investing.com -- Oil prices soared Friday, putting them on course for hefty weekly gains, after the U.S. sanctioned a couple of tanker owners for violating the sanctions program against Russian crude exports, raising supply concerns in an already tight market.
By 09:50 ET (13.50 GMT), the U.S. crude futures traded 3.2% higher at $85.57 a barrel, while the Brent contract climbed 3.1% to $88.70 a barrel.
U.S. sanctions threaten to further limit supply
The U.S. placed sanctions on Turkey-based and UAE-based owners on Thursday, citing last year’s cap of $60 a barrel introduced by the G-7 last year as they sought to reduce Russia's revenues from seaborne oil exports as part of sanctions for its invasion of Ukraine.
"Because of the actions we're announcing today, and the further actions we will take in the coming weeks and months, these costs will continue to rise and Russia's ability to sustain its barbaric war will continue to weaken," Reuters reported a senior Treasury official saying on a call.
The idea of further action could limit global supply further given Russia is the world's second-largest oil producer and a major exporter.
Hefty weekly gains likely
The crude benchmarks have seen volatile trading during the week, but are set to post weekly gains of between 4% and 5% after both surged on Monday in the wake of the weekend attack by militant Islamist group Hamas on Israel.
This violence threatened to spill over into other parts of the oil-rich Middle East, further threatening global supply.
“Reports that the Iranian government was surprised by the Hamas attack may also ease concern that the U.S. will enforce sanctions against Iran more aggressively, although there have been conflicting reports in recent days regarding Iran's involvement,” said analysts at ING, in a note.
OPEC keeps 2024 oil demand growth forecast unchanged
Helping the tone Friday was the news that the Organization of Petroleum Exporting Countries stuck to its forecast that demand will rise by 2.25 million barrels a day in 2024, when it released its monthly report on Thursday.
Concerns about slowing global growth as central banks tackle elevated inflation with tighter monetary policy weighed heavily on the oil markets earlier in the year.
That said, the forecast from the group of oil producers is increasingly differing from the estimates by the International Energy Agency, which lowered its forecast for growth in oil demand in 2024 to 880,000 barrels per day from 1 million barrels earlier this week.
U.S. crude inventories soar
Worries about global demand increased U.S. crude stockpiles jumped more than 10 million barrels last week, their most in eight months, according to official data from the Energy Information Administration, released a day later than usual on Thursday.
The US crude inventory balance rose by 10.176 million barrels during the week to Oct. 6, the most since a weekly rise of 16.283M in mid-February,