Oil prices on the decline with traders assessing Russian supply outlook and sanctions risks

Investing.com- Oil prices fell in the Asian session on Tuesday, giving back some of their gains from the previous session. Traders weighed the possibility of additional U.S. sanctions against Russia against signs of progress in peace efforts to end the war in Ukraine.

As of 01.45 GMT (21.45 ET), October maturity Brent Oil Futures fell 0.5% to $68.46 per barrel, while West Texas Intermediate (WTI) crude futures fell 0.6% to $64.44 per barrel.

Both contracts were up nearly 2% on Monday after drone attacks on Russian oil and gas infrastructure by Ukraine fueled supply concerns.

Markets assess supply outlook amid geopolitical tensions

The conflict in Ukraine remains the main driver of market sentiment. US President Donald Trump has tried to position himself as a mediator, but warned last week that he would impose new sanctions on Moscow if no progress was made towards a peace deal within two weeks.

Vice President J.D. Vance said Russia had made “important concessions”, including security guarantees for Ukraine, but Western diplomats cautioned that Moscow was not committing to a binding framework.

Trump has raised the prospect of holding a triple summit with Ukrainian President Volodymyr Zelenskiy and Russian President Vladimir Putin, but no date has yet been set.

The possibility of a peace deal has led to concerns of a global oil supply surplus, especially if US sanctions on Russian oil are eased following a deal.

However, continued waning early optimism about the Russia-Ukraine ceasefire is supporting oil prices; additional US restrictions on Russian oil could also provide further support to prices.

US to increase tariffs on India this week

In trade developments, the US will impose an additional 25% punitive tariff on Indian goods from August 27, increasing the total tariff to 50%.

The move is a response to India's increased purchases of Russian oil. Indian officials have voiced their dissatisfaction with the tariffs, saying that India should defend its fundamental interests.

Some Indian oil handlers have indicated they will continue to buy Russian crude, signaling a sustainable demand that could support global oil prices.

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