Oil prices slipped 2% on Tuesday, marking a third straight day of declines as traders weighed the impact of U.S. sanctions on Russia’s two largest oil producers and the likelihood of another OPEC+ output increase next month. Brent crude futures fell $1.22 (1.9%) to $64.40 a barrel, while U.S. West Texas Intermediate closed $1.16 (1.9%) lower at $60.15.
The drop followed last week’s sharp rally — the biggest weekly gain since June — after the U.S. imposed new sanctions on major Russian energy firms Rosneft and Lukoil in response to Moscow’s ongoing war in Ukraine.
Germany confirmed that the U.S. had granted a waiver for Rosneft’s German operations, softening some of the immediate market reaction. Analysts said the exemption fueled speculation that enforcement of the sanctions could be uneven, dampening concerns of an abrupt tightening in global supply.
Russia’s Lukoil said it would divest its international assets following the sanctions, marking one of the most significant corporate moves by a Russian company since the start of the full-scale invasion in 2022. Lukoil accounts for roughly 2% of global oil production.
In Asia, Indian refiners paused new orders for Russian crude as they await guidance from government and banking authorities. Industry officials said a full halt is unlikely, but new purchases have been delayed pending clarity.
OPEC+ members, meanwhile, appear to be leaning toward another modest output increase in December as Saudi Arabia continues to prioritize market share. The group has been reversing production cuts implemented in previous years to support prices.
The head of Saudi Aramco said Tuesday that global demand remains strong, particularly from China, even before the latest sanctions were announced. Rising OPEC+ supply could help offset any near-term reduction in Russian exports, analysts noted.
Markets also remain focused on the upcoming meeting between Presidents Trump and Xi Jinping in South Korea this Thursday, which could lead to a temporary easing of trade tensions between the world’s two largest oil consumers. Chinese Foreign Minister Wang Yi said both sides are preparing “high-level interactions” to stabilize relations and avoid further economic fallout.