Oil prices dipped slightly in the first trading session of 2026, following the largest annual drop since 2020, as investors weighed concerns of oversupply against the impact of geopolitical risks, including the war in Ukraine and issues with Venezuelan exports.
On Friday, the Brent crude contract fell by 10 cents to settle at $60.75 per barrel; U.S. West Texas Intermediate (WTI) also declined by 10 cents, closing at $57.32 per barrel.
Despite negotiations being hosted by U.S. President Donald Trump aimed at ending the nearly four-year-long conflict, Russia and Ukraine exchanged accusations of attacking civilians on New Year's Day.
In recent months, Kyiv has intensified its strikes on Russian energy infrastructure in an effort to sever Moscow's funding sources for its military operations in Ukraine.
Concurrently, the Trump administration continues to ramp up pressure on Venezuelan President Nicolás Maduro, imposing sanctions on Wednesday against four companies and their associated tankers, alleging these entities are operating within Venezuela's oil sector.
In the Middle East, tensions between OPEC members Saudi Arabia and the United Arab Emirates over the Yemen crisis deepened further. On Thursday, flights were suspended at Aden airport. This move comes ahead of an online meeting scheduled for January 4 by the OPEC+ group, which includes OPEC and its allies.
"Traders widely expect OPEC+ to continue pausing production increases in the first quarter," said June Gao, an analyst at commodities brokerage Sparta Commodities.
The 2025 Decline In 2025, both the Brent and WTI benchmark crude prices recorded annual declines of nearly 20%, the most severe since 2020, as worries about oversupply and tariff issues overshadowed geopolitical risks. This marked the third consecutive year of decline for Brent crude, setting a record for the longest losing streak.
"For now, we anticipate Brent prices will be quite flat in 2026, fluctuating within a range of $60 to $65 per barrel," said Suvro Sarkar, an energy analyst at DBS Bank.
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