Oil Prices Slip Following Gains On Fresh US Sanctions - Focus Shifts To OPEC+ Meet

Oil prices dipped in early trading on Wednesday after rising over 1% in the previous session due to U.S. sanctions on several shipping firms for carrying Iranian oil.

Benchmark Brent crude prices fell 0.3% to $68.95 per barrel, while U.S. West Texas Intermediate prices fell 18 cents to $65.40 per barrel at 4.35 a.m. ET. Retail sentiment on Stocktwits about the United States Oil Fund (USO) was in the 'bearish' territory at the time of writing.

Both contracts had gained on Tuesday after the U.S. issued fresh sanctions on a network of shipping companies and vessels led by an Iraqi-Kittitian businessman for smuggling Iranian oil, falsely shown as Iraqi oil.

Investors will now wait keenly for the next meeting of the OPEC+ producer group on Sept. 7.“We would not be surprised if an increase in output is allowed,” said Junaid Ansari, the Head of Investment Strategy & Research at Kamco Invest on CNBC. He added that the impact of the previous output hikes has not been as severe as initially thought.

“Oil has significant support at $60 per barrel,” Ansari added.

U.S. crude oil stockpiles were expected to have fallen last week, along with distillate and gasoline inventories.

Benchmark crude prices have also been supported by supply concerns due to an escalation in the war in Ukraine in recent weeks, despite efforts by the Trump administration to bring the sides to the negotiating table.

Over the weekend, Kyiv amped up its attack on Russian refineries amid Russian attacks on its own energy infrastructure. Some parts of Russia have already been facing fuel shortages since August. On Wednesday, Russia launched over 500 drones and missiles in an overnight attack. 

However, U.S. manufacturing activity continued to decline for the sixth consecutive month, clouding the demand outlook.

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