Oil inches up following biggest annual loss since 2020

• Ukrainian drones hit Russian refineries
• Venezuela cuts residual fuel exports to minimum
• US oil production hit record high in October

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 US blockade pressured Venezuela’s exports.

Brent crude futures climbed 35 cents on Friday to $61.20 a barrel by 04:09 GMT, while US West Texas Intermediate crude was at $57.76 a barrel, up 34 cents.

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

Kyiv has been intensifying strikes 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.

The US blockade aims to keep sanctioned tankers from entering or leaving Venezuela and is forcing state energy company PDVSA to resort to extreme solutions to avoid shutting down refining units as residual fuel inventories build up.

The Brent and WTI benchmarks recorded annual losses of nearly 20 percent 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.

The muted movement in oil prices reflected a struggle between short-term geopolitical risks and longer-term market fundamentals that point towards oversupply ahead of next week’s Opec+ meeting, Priyanka Sachdeva, a senior market analyst at Phillip Nova said in a note, with WTI prices skewed towards the $55 to $65 per barrel range in the first quarter.

Further reading:

• IEA cuts 2026 oil glut forecast for first time since May
• As crude prices fall, Opec+ diplomats brace for an oil glut
• Saudi Arabia’s policy trilemma: Oil, debt and deficits in 2026

The Organization of the Petroleum Exporting Countries and its allies will meet virtually on January 4.

Traders are widely expecting Opec+ to continue pausing output hikes 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 that would provide a floor to oil prices.

In the US, 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.