Brent futures fell $1.09, or 1.35%, to close at $79.92, while U.S. West Texas Intermediate (WTI) crude fell $1.32, or 1.67%, to $77.50 a barrel.
Prices jumped 2% on Monday after the U.S. Treasury Department on Friday imposed sanctions on Gazprom Neft and Surgutneftegas as well as 183 vessels that transport oil as part of Russia’s so-called shadow fleet of tankers.
The U.S. Energy Information Administration said on Tuesday that oil demand in the U.S. would remain steady at 20.5 million barrels per day (bpd) in 2025 and 2026, but oil output for the nation would rise to 13.55 million bpd, an increase on the agency’s previous forecast of 13.52 million bpd for this year.
Phil Flynn, senior analyst with Price Futures Group, said markets were anticipating the EIA short-term energy outlook to see if a predicted gain in supply would be reversed.
“They’re waiting to see the glut EIA predicted earlier is still in the forecast,” Flynn said.
While analysts were still expecting a significant price impact on Russian oil supplies from the fresh sanctions, their effect on the physical market could be less pronounced than what the affected volumes might suggest.
ING analysts estimated the new sanctions had the potential to erase the entire 700,000-bpd surplus they had forecast for this year, but said the real impact could be lower.
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“The actual reduction in flows will likely be less, as Russia and buyers find ways around these sanctions,” they said in a note.
Uncertainty about demand from major buyer China could blunt the impact of the tighter supply. China’s crude oil imports fell in 2024 for the first time in two decades, opens new tab outside of the COVID-19 pandemic, official data showed on Monday.