Oil prices started 2026 slightly higher, recovering modestly after posting their largest annual decline since 2020 last year. Prices were supported by escalating geopolitical tensions, including Ukrainian drone attacks on Russian oil infrastructure and renewed U.S. pressure on Venezuela’s energy exports.
Brent crude futures rose 35 cents to $61.20 per barrel, while U.S. West Texas Intermediate crude gained 34 cents to $57.76 per barrel in early trading.
Tensions between Russia and Ukraine remained elevated on New Year’s Day, with both sides accusing each other of targeting civilians. The developments come despite ongoing diplomatic efforts overseen by Donald Trump, aimed at ending the conflict now approaching its fourth year.
Ukraine has intensified strikes on Russian energy facilities in recent months, seeking to reduce Moscow’s revenue streams that fund its military operations.
Meanwhile, Washington increased pressure on Venezuela by imposing fresh sanctions on four companies and related oil tankers linked to the country’s energy sector. The measures are part of a broader U.S. blockade designed to restrict sanctioned vessels from entering or exiting Venezuela.
The restrictions have forced state-owned energy company PDVSA to take extraordinary steps to keep refineries running, as fuel inventories continue to build.
Despite the recent uptick, both Brent and WTI ended 2025 down nearly 20%, marking their steepest annual losses since 2020. For Brent, it was the third consecutive year of declines, the longest losing streak on record. Market concerns around oversupply and trade tariffs ultimately outweighed geopolitical risks.
Analysts noted that the subdued price action reflects a balance between short-term geopolitical disruptions and longer-term fundamentals pointing to excess supply. Priyanka Sachdeva, senior market analyst at Phillip Nova, said prices remain capped ahead of the upcoming OPEC+ meeting, with WTI likely to trade between $55 and $65 per barrel in the first quarter.
OPEC and its allies are scheduled to meet virtually on January 4, with traders widely expecting the group to maintain its pause on output increases during early 2026.
June Goh, senior analyst at Sparta Commodities, said the year ahead will be critical for assessing how OPEC+ manages supply. She added that China’s continued crude stockpiling in the first half of the year should help provide a price floor.
In the United States, oil production reached a record 13.87 million barrels per day in October, according to data from the Energy Information Administration. The agency also reported that crude inventories declined last week, while gasoline and distillate stockpiles increased amid strong refinery activity.
