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Brent, WTI average price in 2025 is lowest since 2020 Brent expected to record longest annual losing streak in history UAE withdraws troops from Yemen amid conflict with Saudi Arabia Oversupply offsets geopolitical risks, sanctions on major producers
(Reuters) – Oil prices were little changed on Wednesday and are on track to fall by more than 15% into 2025, as concerns of oversupply grew in a year marked by war, higher tariffs, OPEC+ output and sanctions on Russia, Iran and Venezuela.
Brent crude oil futures fell nearly 18%, the steepest annual decline since 2020, but continued with a third consecutive year of losses, the longest losing streak in history. US West Texas Intermediate crude oil was heading for a 19% annual decline.
Jason Yin, a commodity analyst at BNP Paribas, expects Brent prices to fall to $55 a barrel in the first quarter and recover to $60 a barrel for the remainder of 2026 as supply growth is expected to normalize while demand remains flat.
“The reason we’re more bearish than the market in the near term is because we think U.S. shale producers have been able to hedge at a high level,” he said.
“Supply from shale producers will therefore be more stable and less susceptible to price fluctuations.”
Average prices for both benchmarks in 2025 are the lowest since 2020, according to LSEG data. At 1030 GMT, Brent crude oil futures were up 9 cents at $61.42 a barrel, while U.S. West Texas Intermediate crude oil futures were up 10 cents at $58.05.
U.S. crude oil and fuel inventories rose last week, market sources said Tuesday, citing American Petroleum Institute data. The U.S. Energy Information Administration is scheduled to release the data later Wednesday.
After a strong start, prices cool down
Oil markets got off to a strong start to 2025 as former President Joe Biden ended his term with tougher sanctions on Russia, disrupting supplies to top buyers China and India.
The war in Ukraine intensified after Ukrainian drones damaged Russia’s energy infrastructure and disrupted Kazakhstan’s oil exports, and the Iran-Israel conflict, which lasted 12 days in June, threatened shipping through the Strait of Hormuz, the world’s main maritime oil route, and sent oil prices soaring.
Adding to the geopolitical tensions of recent weeks, OPEC’s top producers Saudi Arabia and the United Arab Emirates have been embroiled in a crisis over Yemen, with US President Donald Trump ordering a blockade of Venezuelan oil exports and threatening another attack on Iran.
But prices have cooled as OPEC+ accelerated production increases this year and concerns about the impact of U.S. tariffs weighed on global economic and fuel demand growth.
Key events that will affect Brent crude oil prices in 2025
OPEC+
The Organization of the Petroleum Exporting Countries and its allies have suspended oil production increases until the first quarter of 2026, after releasing about 2.9 million barrels per day onto the market since April. The next OPEC+ meeting will be held on January 4th.
Most analysts expect supply to exceed demand next year, with estimates ranging from the International Energy Agency’s 3.84 million barrels per day to Goldman Sachs’ 2 million barrels per day.
“If prices really come down significantly, you’re going to see some production cuts (by OPEC+),” said Martin Lutz, global oil strategist at Morgan Stanley. “But we’ll probably have to go much lower going forward. Probably in the low $50s.”
“If today’s prices are simply favorable, we’ll probably see some easing of these rate cuts continue after the first-quarter pause.”
John Driscoll, managing director at consulting firm JTD Energy, expects geopolitical risks to support oil prices despite fundamentals pointing to oversupply.
“Everyone is saying the economy will be even weaker in 2026 and beyond,” he said. “But I’m not going to ignore geopolitics. Trump wants to be involved in everything, so the Trump factor will play a big role.”
Reporting by Florence Tan and Enes Tunagur. Additional reporting by Shihar Dareen in London Editing by Thomas Darpinhaus, Jacqueline Wong and Frances Kelly
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