Oil prices edged higher on the first trading day of 2026 after posting their biggest annual loss since 2020
Oil prices rose slightly after last year's biggest annual loss since 2020, driven by Ukrainian strikes on Russian oil facilities and a US blockade cracking down on Venezuelan exports.
Brent crude futures rose 35 cents to $61.20 a barrel as of 04:09 GMT on Friday, while WTI crude rose 34 cents to $57.76 a barrel.
Russia and Ukraine continue to exchange accusations of attacks on civilians, despite talks aimed at ending their nearly four-year-long war.
In recent months, Kyiv has intensified its attacks on Russian energy infrastructure, aiming to cut off funding for Moscow's military operation in Ukraine.
In its latest move to increase pressure on Venezuelan President Nicolas Maduro, the Trump administration imposed sanctions on four companies operating in Venezuela’s oil sector and related oil tankers on Wednesday.
The US blockade aims to prevent the sanctioned tankers from entering or leaving Venezuela and is forcing state energy company PDVSA to resort to extreme measures to avoid shutting down refinery units as fuel stockpiles accumulate.
Brent and WTI oil prices have recorded losses of approximately 20% year-on-year in 2025, as concerns about oversupply and tariffs outweigh geopolitical risks; this is the sharpest decline since 2020. For Brent, this marks the third consecutive year of losses, the longest losing streak on record.
The sluggish movement in oil prices reflects a struggle between short-term geopolitical risks and long-term market fundamentals, pointing to oversupply ahead of next week’s OPEC+ meeting.
The Organization of Petroleum Exporting Countries and its allies (OPEC+) will meet virtually on January 4.
Despite all the fundamental risks, China will likely continue to increase its crude oil inventories, providing a floor for oil prices in the first half of the year.
2026 will be a crucial year for OPEC+ to assess its supply balancing decisions.
According to data released Wednesday by the U.S. Energy Information Administration (EIA), oil production reached a record high of 13.87 million barrels per day in October. The EIA reported that while crude oil inventories fell, gasoline and distillate fuel inventories increased last week due to strong refining activity.
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