Oil prices declined on the first trading day of 2026 after posting their largest annual loss since 2020, as investors balanced oversupply concerns with ongoing geopolitical tensions, including the war in Ukraine and Venezuelan oil exports. Brent crude futures fell 39 cents to $60.46 a barrel, while U.S. West Texas Intermediate crude dropped 37 cents to $57.05.
Russia and Ukraine exchanged accusations of attacks on civilians on New Year’s Day, despite talks overseen by former U.S. President Donald Trump aimed at resolving the nearly four-year conflict. Kyiv has intensified strikes on Russian energy infrastructure to cut off Moscow’s military financing. Meanwhile, the Trump administration imposed sanctions on four Venezuelan companies and oil tankers, targeting the country’s oil sector, and threatened support for Iranian protesters amid ongoing unrest, which represents a significant internal challenge to Iranian authorities.
Despite these geopolitical risks, analysts note that the oil market remains largely unaffected, with prices trading within a long-term range due to expectations of ample supply. In the Middle East, tensions between Saudi Arabia and the United Arab Emirates over Yemen escalated after flights were halted at Aden airport. OPEC+, including OPEC members and allied producers, is set to meet on January 4, with traders widely expecting the group to maintain its pause on output increases during the first quarter of 2026.
