REUTERS/Ismail Zitouny
- Oil prices jumped more than 4% Friday amid rising geopolitical tensions.
- The US on Thursday sanctioned two shipping firms that it said broke the G7 oil price cap.
- Markets continue to watch how the Israel-Hamas conflict unfolds in the Middle East.
Oil prices jumped on Friday amid swirling geopolitical tensions in Europe and the Middle East.
West Texas Intermediate climbed 4.25% to $86.41 a barrel, while Brent crude, the international benchmark, jumped 4.09% to $89.52 a barrel.
On Thursday, the US imposed sanctions on two shipping firms that allegedly violated the G7's $60-per-barrel price cap on Russian oil. The mechanism is meant to keep energy supplies flowing on global markets while limiting Moscow's oil profits.
The US Treasury's Office of Foreign Assets Control said one tanker owner in Turkey and one in the United Arab Emirates were carrying Russian oil above the price cap.
Meanwhile, investors continue to monitor the Israel-Hamas conflict, which could expand to other parts of the region and potentially disrupt oil flows. While Israel itself is not a major crude producer, the Middle East is responsible for over one-third of global seaborne trade.
On Friday, Israel said more than 1 million residents of the northern Gaza Strip must evacuate, with a ground attack widely expected to begin later.
Economist Nouriel Roubini warned earlier this week that the impact of the Israel-Hamas conflict has yet to be fully priced into markets. So far, he said, investors are accounting for only a baseline scenario in which Israel occupies Gaza but that the conflict would remain otherwise contained.
Still, Roubini sees a potential for further downside risk if Iran and Lebanon get involved.
"If that were to be the case, of course the supply of oil from the Gulf gets disrupted and you get a spike in oil prices and then the economic impact would be huge," the economist said.