Oil falls nearly 2pc as investors assess Russia sanctions

LONDON, Oct 28 (Reuters): Oil prices fell by nearly 2 per cent on Tuesday in a third day of declines as investors assess the effect of US sanctions on Russia's two biggest oil companies along with a potential OPEC+ plan to raise output.

Brent crude futures were down $1.09, or 1.7 per cent, to $64.53 a barrel at 1253 GMT. US West Texas Intermediate crude futures were down $1.07, or 1.8 per cent, at $60.24.

"Traders weighed up progress in US-China trade talks and the broader outlook for supply," ANZ said in a morning note.

Brent and WTI last week registered their biggest weekly gain since June, reacting to US President Donald Trump's decision to impose Ukraine-related sanctions on Russia for the first time in his second term, targeting oil companies Lukoil and Rosneft.

Investors continue to chew over how effective those sanctions on Russia might be.

"The oil market is still debating whether the latest sanctions will impact Russian oil exports or not, with market players reducing somewhat the supply risk premium built in last week," said UBS analyst Giovanni Staunovo.

The effect of sanctions on oil-exporting countries will be limited because of surplus capacity, International Energy Agency Executive Director Fatih Birol said on Tuesday.

Following the US sanctions, Russia's second-largest oil producer, Lukoil, said on Monday it would sell its international assets.

This is the most consequential action so far by a Russian company in the wake of Western sanctions over Russia's war in Ukraine, which started in February 2022.