Oil prices drop after biggest annual loss since 2020

LONDON: Oil prices dipped on the first day of trade in 2026 after registering their biggest annual loss since 2020 as investors weighed oversupply concerns against geopolitical risks including the war in Ukraine and Venezuela exports.

Brent crude futures lost 51 cents to $60.34 a barrel by 1350 GMT on Friday while U.S. West Texas Intermediate crude was down 52 cents at $56.90.

Russia and Ukraine traded allegations of attacks on civilians on New Year’s Day despite talks overseen by U.S. President Donald Trump that are aimed at bringing an end to the nearly four-year-old war.

Kyiv has been intensifying strikes against Russian energy infrastructure in recent months, aiming to cut off Moscow’s sources of financing for its military campaign in Ukraine.

Elsewhere, the Trump administration’s efforts to increase pressure on Venezuelan President Nicolas Maduro continued with Wednesday’s imposition of sanctions on four companies and associated oil tankers that it said were operating in Venezuela’s oil sector.

In the Middle East, a crisis between OPEC producers Saudi Arabia and the United Arab Emirates over Yemen has deepened after flights were halted at Aden’s airport on Thursday. This came before a virtual meeting between the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and its allies on January 4.

Traders widely expect OPEC+ to continue its pause on output increases in the first quarter, said Sparta Commodities analyst June Goh.

“2026 will be an important year on assessing OPEC+ decisions for balancing supply,” she said, adding that China would continue to build crude stockpiles in the first half, providing a floor for oil prices.

2025 LOSSES

The Brent and WTI benchmarks recorded annual losses of nearly 20% in 2025, the steepest since 2020, as concerns about oversupply and tariffs outweighed geopolitical risks. It was the third straight year of losses for Brent, the longest such streak on record.

“As of now, we are expecting a fairly boring year for (Brent) oil prices, range-bound around $60-65 a barrel,” said DBS energy analyst Suvro Sarkar.

Phillip Nova analyst Priyanka Sachdeva said the muted price movement reflected a struggle between short-term geopolitical risks and longer-term market fundamentals that point towards oversupply.