Oil prices edged higher, Brent poised for longest annual losing streak ever
Oil prices were little changed on Wednesday, but are poised for a more than 15% drop for 2025 as supply exceeds demand in a year marked by wars, high tariffs, OPEC+ production, and sanctions on Russia, Iran, and Venezuela.
Brent crude futures, down nearly 18% - the most substantial annual percentage decline since 2020 - are on track for a third straight year of losses, their longest-ever losing streak. The March contract, which expires on Wednesday, rose 11 cents to $61.44 a barrel at 0451 GMT.
WTI traded 11 cents higher at $58.06, heading for a 19% year-on-year decline.
According to LSEG data, average prices for both indicators in 2025 are at their lowest levels since 2020.
Analysts expect Brent crude to fall to $55 a barrel in the first quarter, then rise to $60 a barrel for the remainder of 2026, with expectations of normalized supply growth and stable demand.
Oil markets had a strong start to 2025 as Biden concluded his term with tough sanctions on Russia, disrupting supply to major buyers China and India. The war in Ukraine intensified, with Ukrainian drones damaging Russian energy infrastructure and disrupting Kazakhstan's oil exports. The 12-day Iran-Israel conflict in June also drove up oil prices, threatening shipping traffic through the Strait of Hormuz, a key oil transit point.
Adding to these geopolitical tensions, OPEC's largest producers, Saudi Arabia and the United Arab Emirates, are embroiled in a conflict over Yemen. Trump is blockading Venezuela's oil exports and has threatened another attack on Iran.
Prices have fallen following OPEC+'s acceleration of production increases this year and concerns about the impact of US tariffs on the global economy and fuel demand growth.
After injecting approximately 2.9 million barrels of oil per day into the market since April, OPEC+ halted oil production increases for the first quarter of 2026. The next OPEC+ meeting is scheduled for January 4th.
Most analysts predict that supply will exceed demand next year, and we will likely see some cuts from OPEC+ next year. However, while fundamental indicators point to a supply surplus, geopolitical risks are expected to support oil prices. We also need to consider the interfering "Trump factor," as he wants to meddle in everything.
In short, the coming year doesn't look very peaceful for us in all respects!
Happy New Year...
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