Oil prices decline amid OPEC+ production pressures and anticipation of a trade deal between Washington and Beijing

Oil prices continued to decline on Tuesday, October 28, affected by increasing pressures resulting from the OPEC+ alliance's plans to increase production, while investors await potential outcomes from trade talks between the United States and China.

Brent crude futures recorded a decrease of 0.2% to reach $65.47 per barrel, while West Texas Intermediate crude futures fell by a similar percentage to $61.15.

In an analytical note, ANZ Bank stated: "Traders balanced the progress made in trade talks between the United States and China against broader supply expectations."

Four sources familiar with the matter told Reuters that the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, is heading towards another modest increase in production in December, a move that could negatively impact prices. This comes after the alliance began to reverse its production-cutting policy that it had followed for years to support the market since April.

In contrast, markets may see support if the United States and China, the world's largest consumers of crude, succeed in reaching a trade agreement. U.S. President Donald Trump is expected to meet with Chinese President Xi Jinping on Thursday in South Korea, in a meeting that may yield positive signals.

In this context, the Chinese Foreign Minister informed his U.S. counterpart during a phone call on Monday that Beijing hopes Washington will meet it halfway "to prepare for high-level interactions" between the two countries.

Despite the current decline, oil prices recorded their largest weekly gains last week since June, following President Trump's imposition of new sanctions on Russia due to the war in Ukraine, targeting the two oil giants Lukoil and Rosneft.

In a notable development, Lukoil, Russia's second-largest oil producer, announced on Monday that it intends to sell its international assets, a move considered the most significant of its kind for a Russian company in the face of Western sanctions imposed on Moscow since the outbreak of the war in February 2022.

ANZ Bank commented on these developments, saying: "Markets were surprised by the U.S. move to impose sanctions on two of the largest Russian oil producers, Rosneft and Lukoil, which together account for about half of Russia's total crude exports. However, concerns about an oil surplus remain."