Oil drops 2% as markets parse Russia sanctions, OPEC+ talk
Oil prices slipped for a third straight session on Tuesday, October 28. By mid‑morning London time, Brent was down about 2% near $64.3/bbl, with WTI lower around $60.1/bbl.
The pullback follows last week’s rally after Washington unveiled Ukraine‑related sanctions that, for the first time this term, directly targeted major Russian producers Lukoil and Rosneft.
Markets are still debating how much those measures will bite. Analysts note that global spare capacity and rerouting options could blunt near‑term export disruption. International Energy Agency chief Fatih Birol said the overall effect on oil‑exporting nations is likely to be limited given spare capacity, tempering the supply‑shock narrative. Reflecting uncertainty, Lukoil said it would sell international assets, while Indian refiners paused new orders for Russian crude pending guidance.
On the producers’ side, four sources told Reuters OPEC+ is leaning toward another modest output increase in December, continuing its gradual unwind of long‑running cuts. After years of restraint, the group began adding back barrels in April; an additional bump would soften supply risk premia further if demand holds.
Macro currents are pulling too. U.S. and Chinese officials sketched a framework for a trade deal for Presidents Trump and Xi to consider later this week in South Korea, lifting risk appetite across Asia equities and commodities tied to global growth. Meanwhile, traders widely expect the Federal Reserve to cut rates by 25 bps on Wednesday after cooler‑than‑expected September inflation; with cuts mostly priced, attention is on Chair Powell’s guidance for December.
FX moves mirror the mix: the U.S. dollar firmed against the yen (near ¥153), while the Aussie – often treated as a China proxy – ticked higher on trade‑thaw hopes. A stronger dollar can pressure crude by making it pricier for non‑U.S. buyers, adding to today’s drift.
Overall, oil is recalibrating from last week’s geopolitics-driven bounce toward a more balanced setup, as markets weigh the real-world impact of sanctions, an OPEC+ signal of incremental supply, and a tentative improvement in U.S.–China tone that supports demand expectations.
Earlier, GNcrypto reported that the EU’s 19th sanctions package introduced its first blanket ban on cryptocurrency transactions for Russian residents and explicitly targeted crypto platforms, aiming to close alternative finance channels tied to sanctioned entities. The package also advanced LNG restrictions, expanded bank transaction bans, and tightened export controls. That context matters for energy flows: as financial pipes, including digital‑asset rails, narrow, sanction evasion routes shrink, reinforcing today’s market focus on how effective new measures will be in curbing Russian oil revenues while OPEC+ adjusts supply.
