Israel blocks Gaza fuel supply
The defence ministry announcement came hours after Israeli jets and tanks hit targets affiliated with Hamas, the enclave's Islamist rulers.
No casualties were reported.
The latest round of hostilities has seen firebombs attached to bunches of balloons floating into Israel, setting scrubland ablaze. Sometimes kites are used in the makeshift attacks.
The fuel sanction was "in light of the continued launching of incendiary balloons from the Strip toward the territory of the State of Israel and of the undermining of security stability", the defence ministry said.
Israeli fire services in the south of the country reported 60 fires caused by balloons on Tuesday, and 24 on Wednesday, without recording any casualties.
Hamas and Israel have fought three wars since 2008.
Despite a truce last year backed by the UN, Egypt and Qatar, the two sides clash sporadically with rockets, mortar fire or incendiary balloons.
The Gaza Strip has a population of two million, more than half of whom live in poverty, according to the World Bank.