Khaberni - Oil prices fell by more than 10% in 2025, while Brent crude is headed to record the longest streak of annual losses ever, following a year where supply outpaced demand, marked by wars, increased tariffs, elevated OPEC+ production, and sanctions on Russia, Iran, and Venezuela.
Brent crude futures fell approximately 18%, the largest annual decline since 2018, and are on track to record losses for the third consecutive year. The March contract, expiring on Wednesday, dropped six cents to $61.27 a barrel by 01:47 GMT.
West Texas Intermediate (WTI) crude dropped five cents to $57.90 a barrel, and is headed to record an annual decline of 15%.
Oil markets had a strong start in 2025 when former U.S. President Joe Biden ended his term with the imposition of tougher sanctions on Russia, disrupting supplies to China and India, the largest buyers.
The war in Ukraine intensified when drones launched by Kyiv damaged Russia's energy infrastructure and disrupted Kazakhstan's oil exports. The 12-day conflict between Iran and Israel in June threatened shipping through the Strait of Hormuz, leading to a spike in oil prices.
Geopolitical tensions escalated with the dispute between Saudi Arabia and the UAE, both major producers in the Organization of the Petroleum Exporting Countries (OPEC), over Yemen, and U.S. President Donald Trump's order to impose a blockade on Venezuelan oil exports and his threat of another strike on Iran.
However, prices fell after OPEC+, which includes OPEC and its allies, accelerated production increases this year amid growing concerns about the impact of U.S. tariffs on global economic growth and fuel demand.
* OPEC+
The alliance decided to suspend oil production increases in the first quarter of 2026 after having released about 2.9 million barrels per day into the market since April. The next OPEC+ meeting is scheduled for January 4th.
Most analysts expect supply to exceed demand next year, with a gap ranging from 3.84 million barrels per day according to the International Energy Agency to two million barrels per day according to Goldman Sachs.
Martijn Rats, an analyst at Morgan Stanley, said, "If the price really drops significantly, I imagine we'll see some cuts (from OPEC+)... But perhaps the price needs to drop further from now on - possibly to around $50."
He added, "If today's prices simply prevail, after the suspension (of production increases) in the first quarter, it's likely the (alliance) will continue to roll back these cuts."
