Oil prices stabilized after a two-day decline as investors weighed signs of ample supply against the impact of US sanctions on Russian producers.
Brent crude traded below $66 a barrel, while West Texas Intermediate crude approached $61.
The volume of oil shipped worldwide has reached a record high, indicating a continued buildup of excess supplies. Additionally, the OPEC+ alliance is reviewing production policy during its meeting this week.
The repercussions of US sanctions on Russia
US sanctions on Russia's largest oil companies, which supported prices last week, were again the focus of attention. Washington gave Berlin a six-month deadline to resolve the ambiguous ownership status of Rosneft's assets in Germany.
Meanwhile, informed officials said the US administration's plan aims to make Russian trade more expensive and risky without causing a sharp rise in global prices.
The sanctions represent a clear shift in the oil market narrative, from concerns about oversupply to the risk of disruption, said Charu Chanana, chief investment strategist at Saxo Markets in Singapore.
She added, However, unless sanctions intensify or alternative supplies fail to fill the gap, the market may treat this as a temporary geopolitical premium, rather than a sustainable upward catalyst.
Supply pressures and follow-up to the Trump-Xi meeting
Oil is heading for a third consecutive month of losses as concerns about a supply glut persist, even as both the OPEC+ alliance and rival producers increase production.
Traders are also monitoring the progress of trade negotiations between the United States and China, with President Donald Trump and his Chinese counterpart, Xi Jinping, scheduled to meet on Thursday at a summit, after negotiators paved the way for an agreement.
Prior to the meeting, Trump said he might raise the issue of China's imports of Russian oil, given that Beijing is a major global importer.
Following the imposition of the latest sanctions, some Chinese state-owned companies have canceled their purchases of Russian seaborne oil, while Indian refineries have said they will begin gradually reducing their imports.
