Oil prices fell on the first trading day of 2026 after recording their largest annual decline since 2020. Investors are weighing oversupply risks against ongoing geopolitical tensions, including the war in Ukraine and rising Venezuelan exports.
Brent crude futures dropped 39 cents to $60.46 per barrel, while U.S. West Texas Intermediate (WTI) crude fell 37 cents to $57.05. Both benchmarks saw steep losses in 2025, with Brent down nearly 20%, marking its third consecutive year of declines.
Geopolitical developments continue to influence oil markets. Russia and Ukraine exchanged accusations of attacks on civilians on New Year’s Day, even as U.S.-led talks aim to end the nearly four-year conflict. Kyiv intensified strikes on Russian energy infrastructure to reduce Moscow’s military funding.
Meanwhile, the Trump administration imposed sanctions on four Venezuelan companies and associated oil tankers, further tightening global oil supply concerns. Tensions in the Middle East also persisted after the Aden airport in Yemen was shut, worsening the dispute between Saudi Arabia and the UAE.
“Despite all these geopolitical concerns, the oil market seems unmoved,” said Phil Flynn, senior analyst at Price Futures Group. “Oil prices are locked in a long-term range, suggesting supply remains sufficient.”
OPEC+ is scheduled to meet on January 4, with traders expecting the group to maintain its pause on output increases in the first quarter. Analysts say decisions by OPEC+ will be key to oil prices in 2026. China’s crude stockpiling is also expected to provide support.
Analysts note that muted movements in oil prices reflect a tug-of-war between short-term geopolitical risks and long-term oversupply pressures. “The market is balancing immediate concerns against ample global supply,” said Priyanka Sachdeva of Phillip Nova.
Overall, oil prices are starting 2026 cautiously, with investors closely monitoring OPEC+ policies, geopolitical tensions, and global supply-demand fundamentals.
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