Oil Prices Fall $1 as Markets Weigh Russia Sanctions and OPEC+ Output Plans
Oil prices dropped about $1 a barrel on Tuesday, marking the third straight session of declines. Investors weighed the impact of new U.S. sanctions on Russia’s top oil companies and potential OPEC+ production increases on global supply.
At 10:44 a.m. EDT (14:44 GMT), Brent crude futures fell $1.09, or 1.7%, to $64.53 per barrel, while U.S. West Texas Intermediate (WTI) declined $1.03, or 1.7%, to $60.28.
Both Brent and WTI had posted their strongest weekly gains since June last week after U.S. President Donald Trump imposed Ukraine-related sanctions on Russia for the first time in his second term, targeting energy giants Lukoil and Rosneft.
Market Skepticism Over Russia Sanctions
Despite the initial market reaction, analysts expressed doubts about how strict the sanctions will actually be.
“There is skepticism that the Russia sanctions will be as severe as expected. We saw a clear risk-off mood in trading today,” said Phil Flynn, senior analyst at Price Futures Group.
According to International Energy Agency (IEA) Executive Director Fatih Birol, the sanctions’ overall effect on oil exports may remain limited due to available spare capacity in other producing nations.
Following the sanctions, Lukoil announced plans to sell its international assets, marking one of the most significant corporate moves since the West tightened sanctions over Russia’s war in Ukraine, which began in February 2022.
The Moscow-based producer, which contributes around 2% of global oil output, faces mounting pressure as global buyers reassess supply options.
Indian Refiners Pause Russian Oil Orders
Sources told Reuters that Indian refiners have stopped placing new orders for Russian oil since the sanctions announcement. They are waiting for government guidance and supplier updates before resuming purchases.
At the same time, OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, is reportedly considering a modest output increase in December, according to four insiders familiar with the talks.
The group, which had previously restricted production to stabilize prices, began gradually reversing those cuts in April.
“This raises questions about how much spare capacity OPEC+ really has left,” Flynn added.
OPEC, China Demand, and U.S.–China Trade Talks
The CEO of Saudi Aramco noted that global oil demand remained strong even before sanctions hit Rosneft and Lukoil, with Chinese demand still “healthy and resilient.”
Investors are also watching the outcome of potential U.S.–China trade talks as President Donald Trump prepares to meet President Xi Jinping in South Korea on Thursday.
Beijing’s Foreign Minister Wang Yi told U.S. Secretary of State Marco Rubio that China hopes Washington can “meet halfway” to strengthen future cooperation and trade stability between the two countries.
