Oil prices closed lower on Friday, the first trading day of 2026, recording their biggest annual loss since 2020
Oil prices closed lower after their biggest annual loss since 2020, as investors focused on geopolitical risks, including the war in Ukraine and Venezuelan exports, while concerns about oversupply weighed on the market.
Brent crude futures fell 10 cents to $60.75 a barrel, while WTI crude dropped 10 cents to $57.32.
Despite talks aimed at ending the nearly four-year-long war, Russia and Ukraine exchanged accusations of attacks on civilians on New Year's Day. Kyiv is intensifying its attacks on Russian energy infrastructure, aiming to cut off Moscow's funding for its military operation.
Last week, the Trump administration increased pressure on Venezuelan President Nicolas Maduro, imposing sanctions on four companies and related oil tankers it says operate in Venezuela's oil sector. In a New Year's interview, Maduro stated that his country is willing to accept US investment in its oil sector, coordinate efforts to combat drug trafficking, and engage in serious talks with the United States.
Trump also threatened to aid protesters in Iran if security forces opened fire on them, following days of unrest that represent the biggest domestic threat to Iranian authorities in years.
Despite all these geopolitical concerns, the oil market appears stagnant. Oil prices are locked in this long-term trading range, and there is a sense that the market will be well-supplied regardless.
In the Middle East, the crisis between OPEC member Saudi Arabia and the United Arab Emirates over Yemen deepened on Thursday following the grounding of flights at Aden airport.
The Organization of Petroleum Exporting Countries (OPEC) and its allied producers will meet on Sunday.
2026 will be a crucial year for assessing OPEC+ decisions to balance supply. China is expected to continue increasing its crude oil inventories in the first half of the year, which is expected to create a floor for oil prices.
Benchmark Brent and WTI prices have fallen by approximately 20% in 2025; this is the sharpest decline since 2020. For Brent, this is the third consecutive year of losses, the longest on record.
In a recent striking development, US President Donald Trump announced that they have launched attacks on Venezuela and captured the country's president, Nicolas Maduro.
Maduro and his wife, Cilia Flores, were taken to Stewart Air Force National Guard Base in New York State.
Trump said the US will "govern" Venezuela "until a safe, orderly, and fair transition process is ensured," and that Maduro will be tried in New York.
We will see the positive impact of this development on the markets on January 5, 2026.
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