Crude oil prices slipped again on Tuesday, dragged down by expectations that OPEC+ will raise production in December, offsetting upbeat sentiment around the upcoming U.S.–China trade talks.
By 07:57 GMT, benchmark Brent Crude futures were down $0.83, or 1.26%, at $64.79 per barrel, while West Texas Intermediate (WTI) dropped $0.75, or 1.22%, to $60.56.
“Traders weighed up progress in U.S.-China trade talks and the broader outlook for supply,” analysts at Australia and New Zealand Banking Group (ANZ) wrote in a note.
The weakness comes after both Brent and WTI posted their largest weekly gains since June, rallying on Washington’s decision to impose Ukraine-related sanctions on Russia. The measures announced by President Donald Trump targeted major Russian energy companies Lukoil and Rosneft, marking a significant geopolitical escalation. Investors are still evaluating how disruptive those sanctions may prove for global supply.
Within the producer alliance, sources said OPEC+ is considering a limited supply increase next month as part of its strategy to gradually unwind the output curbs implemented over the past several years. The group began easing production limits in April.
At the same time, hopes of a trade deal between Washington and Beijing remain a supportive factor for demand. Trump and Chinese President Xi Jinping are set to meet Thursday in South Korea, with markets watching closely for signs of a breakthrough between the world’s two biggest oil consumers.
Foreign Minister Wang Yi told U.S. Secretary of State Marco Rubio by phone on Monday that China hopes the U.S. can meet it halfway to “prepare for high-level interactions” between the two countries.
In Russia, the impact of U.S. sanctions is already being felt: Lukoil announced Monday that it will sell its international assets — its most consequential move since Western measures were imposed after the war in Ukraine began in February 2022.
Still, experts expect the effect of sanctions on prices to be muted. Fatih Birol, Executive Director of the International Energy Agency, said spare capacity in the market would likely absorb the shock.
A report by Haitong Securities echoed that view, noting that “market participants broadly view the sanctions as having a short-term impact” and that “oversupply would likely put pressure on prices” over the medium to long term.