Oil prices fell on Monday as investors weighed the prospects for ceasefire talks aimed at ending the Russia-Ukraine war, which could lead to increased Russian oil supplies to global markets.

Brent crude futures fell 25 cents, or 0.4%, to $71.91 a barrel by 0409 GMT. U.S. West Texas Intermediate crude futures fell 20 cents, or 0.3%, to $68.08.

Both benchmarks closed higher on Friday and posted their second straight weekly gain as new U.S. sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supplies.

A U.S. delegation will seek progress toward a Black Sea ceasefire and a broader cessation of violence in the war in Ukraine when it meets for talks with Russian officials on Monday, following discussions with Ukrainian diplomats on Sunday. "Hopes for progress in peace talks between Russia and Ukraine and the potential easing of U.S. sanctions on Russian oil are pushing prices lower," said Toshitaka Tazawa, an analyst at Fujitomi Securities.

"However, investors are holding back large positions as they assess the future trend of OPEC+ production beyond April," he added.

OPEC+ - the Organization of the Petroleum Exporting Countries and its allies including Russia - on Thursday issued a new timetable for seven member countries to make further oil output cuts to offset pumping above agreed levels, which would more than eclipse the monthly output increases the group plans to introduce next month.

"The Ukraine-Russia ceasefire talks raise the prospect of increased Russian exports upon their eventual resolution, while the earliest OPEC+ output increase in April suggests further supply builds, which may be difficult to fully absorb by demand factors," said Singapore-based IG strategist Yeap Jun Rong.

OPEC+ has cut output by 5.85 million barrels per day, equivalent to about 5.7% of global supply, in a series of steps since 2022 to support the market.

OPEC+ confirmed on March 3 that its eight members would resume monthly increases of 138,000 barrels per day from April, citing healthier market fundamentals.

Market participants are also monitoring the impact of new U.S. sanctions on Iran announced last week.

Market sentiment towards oil prices has improved recently given rising supply risks stemming from U.S. sanctions on Iranian exports and some optimism that U.S. retaliatory tariffs may not be as severe as feared, although the broader supply-demand outlook remains mixed, IG's Yeap said.

Iranian oil shipments to China are set to fall in the near term after new U.S. sanctions on refineries and tankers raised shipping costs, but traders said they expect buyers to find a solution to keep at least some volumes flowing. (Newsmaker23)

Source: Reuters