Oil inches up following biggest annual loss since 2020

Oil prices edged up on the first day of trade in 2026, after last year posting their biggest annual loss since 2020, as Ukrainian drones targeted Russian oil facilities and a U.S. blockade pressured Venezuela’s exports.

Brent crude futures climbed 42 cents on Friday to $61.27 a barrel, while U.S. West Texas Intermediate crude was at $57.84 a barrel, up 42 cents.

Russia and Ukraine have traded allegations of attacks on civilians on New Year’s Day despite talks overseen by U.S. President Donald Trump that are aimed at bringing an end to the nearly four-year-old war.

Kyiv has been intensifying strike against Russian energy infrastructure in recent months, aiming to cut off Moscow’s sources of financing for its military campaign in Ukraine.

And in the latest action by Trump’s administration to increase pressure on Venezuelan President Nicolas Maduro, Washington on Wednesday imposed sanctions on four companies and associated oil tankers it said were operating in Venezuela’s oil sector.

In the Middle East, a crisis between OPEC producers Saudi Arabia and the United Arab Emirates over Yemen has deepened after flights were halted at Aden’s airport on Thursday. This came before a virtual meeting between the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, on January 4.

Traders are widely expecting OPEC+ to continue its pause on output increases in the first quarter, said June Goh, a senior analyst at Sparta Commodities. “2026 will be an important year on assessing OPEC+ decisions for balancing supply,” she said, adding that China would continue to build crude stockpiles in the first half, which would provide a floor for oil prices.

The Brent and WTI benchmarks recorded annual losses of nearly 20% in 2025, the steepest since 2020, as concerns about oversupply and tariffs outweighed geopolitical risks. It was the third straight year of losses for Brent, the longest such streak on record.

“As of now, we are expecting a fairly boring year for (Brent) oil prices, rangebound around the $60-65/bbl levels,” said DBS energy analyst Suvro Sarkar.

“First quarter will be weak fundamentally; a renewal of geopolitical tensions are only registering as a blip right now for oil markets and driving some short-term rebounds but are unlikely to cause material movements,” he said.

Priyanka Sachdeva, a senior market analyst at Phillip Nova, said the muted price movement reflected a struggle between short-term geopolitical risks and longer-term market fundamentals that point towards oversupply ahead of the OPEC+ meeting. WTI prices are skewed towards the $55 to $65 per barrel range in the first quarter, she added in a client note.

In the U.S., oil production hit a record high of 13.87 million barrels per day in October, according to the Energy Information Administration on Wednesday. Crude stocks fell while gasoline and distillate inventories rose last week on robust refining activity, the EIA reported. Reuters