Oil prices were little changed on Thursday at the start of trading in 2026, stabilising after suffering their steepest annual decline since 2020, as investors balanced persistent concerns about global oversupply against rising geopolitical tensions.
Brent crude futures edged down four cents to US$60.81 a barrel by late morning in London, while US benchmark West Texas Intermediate slipped three cents to US$57.39.
Both benchmarks ended 2025 with losses of nearly 20 percent, marking the third consecutive year of declines for Brent the longest such streak on record as fears of excess supply, weak demand growth and the impact of tariffs outweighed geopolitical risks.
Markets opened the new year facing a complex mix of signals. On the supply side, analysts say ample production capacity and rising inventories continue to weigh on prices, even as producers remain cautious about boosting output.
At the same time, geopolitical risks remain elevated. Russia and Ukraine traded accusations of attacks on civilians on New Year’s Day, underscoring the fragility of efforts to end the nearly four-year-old conflict despite talks overseen by US President Donald Trump.
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Ukraine has intensified strikes on Russian energy infrastructure in recent months, targeting refineries and fuel depots in an effort to curtail Moscow’s revenue from oil exports, a key source of funding for its military campaign.
Elsewhere, Washington has stepped up pressure on Venezuela’s oil sector. The Trump administration on Wednesday imposed sanctions on four companies and several oil tankers it said were operating in Venezuela, part of a broader push to squeeze the government of President Nicolas Maduro.
In the Middle East, tensions between major oil producers Saudi Arabia and the United Arab Emirates have deepened amid the crisis in Yemen. Flights were halted at Aden’s airport on Thursday, adding to regional uncertainty ahead of a scheduled virtual meeting of the OPEC+ alliance on January 4.
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Traders widely expect OPEC and its allies, known collectively as OPEC+, to maintain their current pause on output increases during the first quarter of 2026, analysts said.
“2026 will be an important year for assessing OPEC+ decisions on balancing supply,” said June Goh, an analyst at Sparta Commodities. She added that China was likely to continue building crude oil stockpiles in the first half of the year, which could help provide a floor under prices.
Despite these supportive factors, many analysts remain cautious about the outlook. Concerns about slowing global economic growth, particularly in key consuming regions, and the prospect of rising non-OPEC supply have reinforced expectations of a well-supplied market.
“As of now, we are expecting a fairly boring year for Brent oil prices, range-bound around $60 to $65 a barrel,” said Suvro Sarkar, an energy analyst at DBS.
Phillip Nova analyst Priyanka Sachdeva said the subdued price movement reflected a tug of war between short-term geopolitical risks and longer-term fundamentals pointing to oversupply.
“Markets are struggling to find direction,” she said, noting that while conflicts and sanctions can cause temporary spikes, underlying supply dynamics continue to cap sustained gains.
For now, investors appear to be entering 2026 with caution, watching closely for signals from OPEC+, developments in major geopolitical flashpoints and signs of whether global demand can absorb abundant supplies in the months ahead.
