Oil prices fell on Friday (January 2), the first trading day of 2026, after posting their biggest annual loss since 2020, as investors weighed oversupply concerns against geopolitical risks, including the war in Ukraine and Venezuelan exports.

Brent crude futures closed down 10 cents at $60.75 a barrel, while U.S. West Texas Intermediate crude fell 10 cents to $57.32.

Russia and Ukraine accused each other of attacks on civilians on New Year's Day despite talks led by U.S. President Donald Trump aimed at ending the nearly four-year war. Kyiv has stepped up attacks on Russian energy infrastructure, aiming to cut off Moscow's funding for its military campaign.

The Trump administration increased pressure on Venezuelan President Nicolas Maduro on Wednesday by imposing sanctions on four companies and associated oil tankers it said were operating in Venezuela's oil sector. Maduro said in a New Year's interview that his country was willing to accept US investment in its oil sector, coordinate in combating drug trafficking, and hold serious talks with the United States.

Trump also threatened to help protesters in Iran if security forces opened fire on them, days after unrest that has posed the biggest internal threat to Iranian authorities in years.

"Despite all these geopolitical concerns, the oil market seems unfazed. Oil prices are locked in this long-term trading range, and there's a feeling that the market will remain well-supplied no matter what," said Phil Flynn, senior analyst at Price Futures Group.

In the Middle East, the crisis between OPEC producers Saudi Arabia and the United Arab Emirates over Yemen worsened after flights were halted at Aden airport on Thursday.

OPEC+, the Organization of the Petroleum Exporting Countries and allied producers, is scheduled to meet on Sunday. Traders widely expect the group to continue delaying production increases in the first quarter, said Sparta Commodities analyst June Goh.

"2026 will be a crucial year in assessing OPEC+'s decision to balance supply," he said, adding that China will continue to build crude oil stocks in the first half, providing a floor for oil prices.

The Brent and WTI benchmarks each lost nearly 20% in 2025, their sharpest declines since 2020. This is the third consecutive year of losses for Brent, the longest such streak on record.

Priyanka Sachdeva, an analyst at Phillip Nova, said the sluggish price movement reflects a struggle between short-term geopolitical risks and long-term market fundamentals that point to oversupply. (alg)

Source: Reuters.com