Oil prices slipped on Monday as investors assessed the outlook for ceasefire talks aimed at ending the Russia-Ukraine war, which could lead to an increase in Russian oil to global markets.
Brent crude futures were down 25 cents, or 0.4%, at $71.91 a barrel by 0409 GMT. US West Texas Intermediate crude fell 20 cents, or 0.3%, to $68.08, Reuters reported.
Both benchmarks settled higher on Friday and recorded a second consecutive weekly gain as fresh US sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supply.
A US delegation will seek progress toward a Black Sea ceasefire and a broader cessation of violence in the war in Ukraine when it meets for talks with Russian officials on Monday, after discussions with diplomats from Ukraine on Sunday.
"Expectations of progress in peace negotiations between Russia and Ukraine and a potential easing of US sanctions on Russian oil pressured prices lower," said Toshitaka Tazawa, an analyst at Fujitomi Securities.
"But investors are holding back on large positions as they evaluate future OPEC+ production trends beyond April," he added.
OPEC+ - the Organization of the Petroleum Exporting Countries and allies including Russia - on Thursday issued a new schedule for seven member nations to make further oil output cuts to compensate for pumping above agreed levels, which will more than overtake the monthly production hikes the group plans to introduce next month.
"Ukraine-Russia ceasefire talks raise the prospects of increased Russian exports on an eventual resolution, while the OPEC+ production hike as early as April points to further supply additions, which may be difficult to be fully absorbed by demand factors," said Singapore-based IG strategist Yeap Jun Rong.
OPEC+ has been cutting output by 5.85 million barrels per day, equal to about 5.7% of global supply, agreed in a series of steps since 2022 to support the market.
It confirmed on March 3 that eight of its members would proceed with a monthly increase of 138,000 bpd from April, citing healthier market fundamentals.
Market participants are also monitoring the impact from new Iran-related US sanctions announced last week.
Market sentiment toward oil prices has improved recently given heightened supply risks stemming from US sanctions on Iranian exports and some optimism that US reciprocal tariffs may be less severe than feared, though the broader demand-supply outlook still remains mixed, IG's Yeap said.
Iranian oil shipments to China are set to fall in the near-term after new US sanctions on a refiner and tankers, driving up shipping costs, but traders said they expect buyers to find workarounds to keep at least some volume flowing.
