Oil Prices Inch Lower to Start 2026 After Worst Annual Loss Since 2020

Singapore/London — Crude oil prices edged down on the first trading day of 2026, extending a bearish trend after both major benchmarks suffered their steepest annual losses since 2020. Brent crude futures settled at $60.75 a barrel, down 10 cents, while U.S. West Texas Intermediate (WTI) also fell 10 cents to $57.32.

The muted opening reflects a market caught between persistent oversupply concerns and simmering geopolitical tensions. Brent and WTI each fell nearly 20% in 2025, marking the third consecutive annual decline for Brent—its longest losing streak on record. "As of now, we are expecting a fairly boring year for oil prices, range-bound around $60-65 a barrel," said DBS energy analyst Suvro Sarkar.

Geopolitical Risks Counterbalanced by Structural Glut

Multiple flashpoints provided underlying support but failed to spark a rally. The war in Ukraine continued, with both sides trading accusations of New Year's Day attacks. Simultaneously, the Trump administration imposed new sanctions on companies linked to Venezuela's oil sector. In the Middle East, tensions between OPEC members Saudi Arabia and the United Arab Emirates deepened over Yemen.

Despite these events, the dominant market narrative remains focused on ample supply. Traders widely expect the OPEC+ alliance to maintain its pause on output increases when it meets virtually on January 4th. "2026 will be an important year for assessing OPEC+ decisions for balancing supply," noted Sparta Commodities analyst June Goh, adding that strategic stockpiling by China could provide a price floor in the first half.

A Market in Search of a New Catalyst

The price action underscores a market undergoing a significant strategic pivot, where traditional geopolitical risk premiums are being consistently overridden by fundamental oversupply and demand uncertainty. For prices to break out of their predicted range, a major disruption to supply or a stronger-than-expected demand surge—perhaps from a competitive ecosystem of global economic growth—would be needed.

For now, the oil market appears set for a period of consolidation, with OPEC+ discipline and Chinese inventory-building acting as key supports, while the high-stakes race between non-OPEC production and global demand growth determines the next sustained directional strategic maneuver.