Oil prices inched up on Monday as investors weighed the impact of fresh U.S. sanctions on Iranian exports against ceasefire talks aimed at ending the Russia-Ukraine war, which could lead to an increase in Russian supplies to global markets.

Brent crude futures gained 4 cents at $72.2 a barrel by 0735 GMT. U.S. West Texas Intermediate crude rose 8 cents, or 0.1%, to $68.36. Prices fell earlier in the day.

Both benchmarks settled higher on Friday and recorded a second consecutive weekly gain as fresh U.S. sanctions on Iran and the latest output plan from the OPEC+ producer group raised expectations of tighter supply.

Market sentiment toward oil prices has improved recently, likely driven by a technical rebound from previous oversold conditions, heightened supply risks stemming from U.S. sanctions on Iranian exports and some optimism that U.S. reciprocal tariffs may be less severe than feared, IG market strategist Yeap Jun Rong said.

Iranian oil shipments to China are set to fall in the near-term after new U.S. sanctions on a privately-owned refiner and tankers, driving up shipping costs, but traders said they expect buyers to find workarounds to keep at least some volume flowing.

"However, the broader demand-supply outlook still remains mixed. Ukraine-Russia ceasefire talks raise the prospects of increased Russian exports on an eventual resolution, while the OPEC+ production hike as early as April points to further supply additions," added Yeap.

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, after discussions with diplomats from Ukraine on Sunday.

Source: Investing.com