Oil firms as market weighs Iran sanctions and talks over Russia-Ukraine ceasefire

By Arunima Kumar

March 24 (Reuters) - Oil prices strengthened in choppy trade on Monday as investors weighed the impact of fresh U.S. sanctions on Iranian exports against talks to end the war in Ukraine, which could increase supply of Russian crude to global markets.

Brent crude futures rose 32 cents, or 0.44%, to $72.48 a barrel by 1252 GMT. U.S. West Texas Intermediate crude was up 34 cents, or 0.5%, at $68.62.

Crude remains rangebound as traders continued to weigh the impact of new U.S. tariffs, the risk of an economic slowdown, as well as increased OPEC+ supply from next month and the prospect of stepped-up U.S. sanctions lowering supply from Iran," said Ole Hansen, head of commodity strategy at Saxo Bank.

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.

The U.S. on Thursday issued new sanctions intended to hit Iranian oil exports, including what the State Department said were the first U.S. measures targeting a Chinese "teapot refinery" processing the crude.

"Some analysts estimate that the sanctions could lead to up to 1 million barrels per day of production removed from the market – although this is likely to be backfilled by increased OPEC production," said Ashley Kelty at Panmure Liberum.

Comments from U.S. President Donald Trump also provided traders with some hope that previously announced tariffs in early April may not be as burdensome as feared.

Trump signalled on Friday that there will be flexibility on tariffs and that his top trade chief plans to speak with his Chinese counterpart.

Meanwhile U.S. and Russian officials were in Saudi Arabia on Monday for talks over a broad ceasefire in Ukraine, with Washington also targeting a separate Black Sea maritime ceasefire deal while a wider agreement is thrashed out.

Oil producer group OPEC+ last week issued a new schedule for seven member nations to make further oil output cuts to compensate for pumping above agreed levels, which will more than overtake the monthly production increases to be introduced next month.

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

Reporting by Yuka Obayashi in Tokyo, Trixie Yap in Singapore and Arunima Kumar in Bengaluru Editing by David Goodman