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Oil prices traded modestly higher on Wednesday but were still heading toward their steepest annual losses since 2020, as persistent concerns over a global supply surplus overshadowed recurring geopolitical tensions that offered only limited, short-lived support.
As of 05:30 ET (10:30 GMT), Brent crude futures for March delivery rose 0.2% to $61.47 per barrel, while West Texas Intermediate (WTI) crude futures were also up 0.2% at $58.11 per barrel.
Both benchmarks are set to close 2025 sharply lower, with Brent down roughly 18% and WTI on track for a nearly 20% annual drop, their biggest percentage declines since the COVID-19 demand shock five years ago.
Supply surplus fears dominate 2025
This year’s losses were driven largely by mounting concerns over excess supply. OPEC+ began gradually unwinding the production cuts that had supported prices in 2023 and 2024, adding new barrels into an already well-supplied market. The increases, alongside resilient non-OPEC output and slower-than-expected global demand growth, kept crude under sustained pressure throughout the year.
Investors are now looking ahead to an OPEC+ meeting on January 4, to be held via video conference, where producers are expected to review market conditions and discuss output policy heading into early 2026.
Geopolitical tensions offer only temporary support
Geopolitical risks provided intermittent price relief but failed to reverse the broader downtrend. Periodic attacks on Russian energy infrastructure during the Ukraine war, flare-ups in the Israel-Hamas conflict, and renewed frictions between the United States and Iran all fueled brief supply-disruption concerns.
Tensions between Washington and Caracas also added uncertainty around Venezuelan exports at times. More recently, the United Arab Emirates said it would withdraw its forces from Yemen after tensions with Saudi Arabia over military operations — a development watched closely given both nations’ key roles within OPEC.
Despite these episodes, traders largely focused on the overarching theme of ample global supply and rising inventories, leaving oil on course for its weakest annual performance since the height of the pandemic.
