Oil prices closed lower on Friday, marking the first trading session of 2026, after posting their steepest annual decline since 2020. Investors continued to balance concerns about global oversupply against ongoing geopolitical risks, including the war in Ukraine and uncertainty surrounding Venezuelan oil exports.
Brent crude futures slipped 10 cents to settle at $60.75 per barrel, while U.S. West Texas Intermediate crude fell by the same margin to $57.32.
Tensions between Russia and Ukraine remained elevated after both sides accused each other of targeting civilians on New Year’s Day. The accusations came despite renewed diplomatic efforts overseen by Donald Trump, aimed at bringing an end to the nearly four-year conflict. Ukrainian forces have stepped up attacks on Russian energy infrastructure in an effort to weaken Moscow’s ability to finance its military operations.
Geopolitical pressure also increased in Latin America. The Trump administration imposed new sanctions on four companies and several oil tankers linked to Venezuela’s energy sector. Venezuelan President Nicolas Maduro said in a New Year’s interview that the country remains open to U.S. investment in oil production, cooperation on drug trafficking, and renewed talks with Washington.
In the Middle East, Trump also warned that the United States could support protesters in Iran if security forces use violence against demonstrators. The unrest has resulted in multiple deaths and represents one of the most serious domestic challenges faced by Iranian authorities in years.
Despite these developments, market reaction remained muted. Phil Flynn, senior analyst at Price Futures Group, said oil prices appear stuck in a long-term trading range. He added that traders believe supply will remain ample regardless of geopolitical flare-ups.
Regional tensions continued to simmer within OPEC. A dispute between Saudi Arabia and the United Arab Emirates over Yemen intensified after flights were suspended at Aden’s airport. Meanwhile, OPEC+ is scheduled to meet on Sunday. Market participants broadly expect the group to maintain its pause on output increases during the first quarter, according to Sparta Commodities analyst June Goh.
Goh said 2026 will be a critical year for evaluating OPEC+ policy decisions as the group seeks to balance supply. She also noted that China is likely to continue building crude inventories in the first half of the year, helping to provide downside support for prices.
Both Brent and WTI crude benchmarks fell nearly 20% in 2025, marking their sharpest annual losses since 2020. For Brent, it was the third consecutive year of declines, the longest losing streak on record.
Phillip Nova analyst Priyanka Sachdeva said the lack of price direction reflects a tug-of-war between short-term geopolitical risks and longer-term fundamentals that continue to point toward an oversupplied oil market.
