Oil prices fell on Tuesday as OPEC’s plan to increase production offset optimism about a potential US-China trade deal. Investors are also assessing the effectiveness of sanctions against Russia.
Brent crude futures fell 3 cents to $65.59 a barrel at 03:59 GMT. WTI crude futures fell 5 cents to $61.26.
Traders are assessing progress in US-China trade talks and the overall supply outlook.
According to four sources familiar with the talks, OPEC+ is considering a modest production increase in December. The group, which has been restricting production for several years to support the oil market, began reversing those cuts in April.
Another factor supporting the market is the possibility of a trade deal between the US and China, the world’s two largest oil consumers.
Trump and Xi Jinping are set to meet in South Korea on Thursday. Foreign Minister Wang Yi said in a phone call with US Secretary of State Marco Rubio on Monday that Beijing hopes to increase talks to “prepare for high-level interactions” between the two countries.
Last week, Brent and WTI recorded their biggest weekly gains since June after Trump imposed Ukraine-related sanctions on Russia for the first time in his second term. These sanctions also targeted oil companies Lukoil and Rosneft.
Following the sanctions, Russia’s second-largest oil producer, Lukoil, announced on Monday that it would sell its international assets. This is the most significant move by a Russian company to date since Western sanctions were imposed on Russia over its war in Ukraine, which began in February 2022.
Fatih Birol, Executive Director of the International Energy Agency (IEA), said on Tuesday that sanctions targeting oil-exporting countries could increase crude oil prices, but their impact would be limited due to excess capacity.
Market participants view the sanctions as having a generally short-term impact, noting that any medium- to long-term supply losses appear limited and that excess supply will likely put pressure on prices.