The Israel Defense Forces said Friday that it would “continue to operate significantly” in the northern Gaza Strip as it gave the region’s 1.1 million people a 24-hour deadline to evacuate. Israeli strikes are pounding the densely populated enclave, and troops are massing nearby ahead of an anticipated ground incursion following Hamas militants’ staged an unprecedented attack on Oct. 7

Turmoil in Middle East makes markets skittish; the region accounts for more than a third of the world’s seaborne oil trade, according to International Energy Agency. While there has been no direct impact on physical supply, “the oil market — like all markets — routinely acts based on emotion rather than logic,” said Pavel Molchanov, managing director and equity research analyst at Raymond James.

“The headlines surrounding this war are creating some extra volatility in oil prices — this is a matter of market psychology, pure and simple,” he said in an email Friday.

Oil prices have been gyrating for days. On Thursday, the Treasury Department sanctioned two shipping companies for violating a $60-per-barrel price cap on Russian crude, marking the first penalties intended to enforce what experts say is a widely flouted rule.

The price cap was initiated in December 2022 with the intent of starving the Russian economy and war machine of oil revenue amid President Vladimir Putin’s invasion of Ukraine. It is backed by a coalition that includes the Group of Seven nations — Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — as well as the European Union.

The Treasury Department’s Office of Foreign Asset Control (OFAC) is imposing penalties against Ice Pearl Navigation Corp., a Turkish shipping company, for transporting Russian crude priced above $80 per barrel. It also sanctioned Lumber Marine, a shipping company based in the United Arab Emirates.

Treasury spokeswoman Megan Apper said enforcement is central to the administration’s effort to limit Russia’s profits from its oil trade, noting that the price cap is designed to keep Russian oil flowing while imposing new costs on Russia, and not to reduce oil supply.

“Indeed, oil prices fell in the hours following the announcement … of course, oil prices are sensitive to many factors, including ongoing conflict in the Middle East,” Apper said in an email.

As a result of the move, both companies are “blocked” by the OFAC, prohibiting any U.S. person or entity from paying or trading for their goods or services. Though the agency left open the possibility that the blocks could be lifted. “The ultimate goal of sanctions is not to punish, but to bring about a positive change in behavior,” the OFAC wrote in its Thursday release.

Officials cast the sanctions as a warning to other shippers.

“We remain committed to implementing a price cap policy that has two goals: reducing the oil profits upon which Russia relies to wage its unjust war against Ukraine and keeping global energy markets stable and well-supplied despite turbulence caused by Russia’s unprovoked invasion of Ukraine,” Deputy Treasury Secretary Wally Adeyemo said in a release, adding, “We will continue to take actions to achieve these two goals.”

The policy appears to be working in that it has forced Russia to explore more costly ways of getting its oil to buyers, along with paying steeper discounts, says Bob McNally, a consultant with Rapidan Energy Group. But rising oil prices could complicate the G7’s plans, he said, because they want to prevent a sharp drop in exports of Russian oil, something that could lead to supply shortages and higher prices.

“Were oil prices to start rising again I would expect the Treasury to dial back on enforcement stringency,” McNally said Thursday. “The main goal remains to keep Russian exports up in order to keep domestic gasoline prices down.”

On Friday, the U.S. average for a galloon of gas stood at $3.63, according to AAA, down 28 cents from a year ago.

Other entities are known to have carried Russian oil priced above the cap, the Treasury Department said. McNally said it’s likely that other companies are violating the price cap, although it’s not clear how many. About 70 percent of Russian exports appear to be using non-G7 transportation services ― which wouldn’t violate the rule. “As for how much of the [remaining] 30 percent might be in violation, we don’t have a strong sense … though the temptation must be there,” he said.

The sanctions against Ice Pearl are related to an April 17 notice stating that OFAC is aware of reports that Eastern Siberia Pacific Ocean (ESPO) oil, which originates from Pacific ports in Russia, was trading over the price cap. The Treasury Department’s news release on Thursday stated that the Yasa Golden Bosphorus, owned by Ice Pearl, had carried ESPO oil priced above $80 per barrel after the cap was imposed.

Lumber Marine is accused of carrying oil priced above $75 per barrel on a ship called the SCF Primorye, a crude-oil tanker registered in Liberia that took oil from Novy Port in a northern section of Russia.

The G-7 put out their own statement saying, “Our Coalition takes all allegations of evasion and illicit activity seriously, and all Coalition members will respond as appropriate if industry players violate our rule.”