Geopolitical tensions and sanctions lift crude slightly, but oversupply fears cap gains ahead of OPEC+ meeting
Global oil prices opened the first trading session of 2026 on a positive note, recovering modestly after suffering their largest annual decline since 2020 last year.
Brent crude futures rose by 35 cents to trade at $61.20 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 34 cents to $57.76 per barrel in early Asian trading.
The mild uptick followed renewed geopolitical tensions, including reported drone attacks by Ukraine on Russian oil facilities and fresh U.S. actions aimed at restricting Venezuela’s crude exports.
Russia and Ukraine traded accusations of civilian attacks on New Year’s Day, despite ongoing peace talks facilitated by U.S. President Donald Trump, as the conflict approaches its fourth year. In recent months, Kyiv has stepped up strikes on Russia’s energy infrastructure in an effort to weaken Moscow’s ability to finance its military operations.
At the same time, Washington intensified pressure on Venezuelan President Nicolás Maduro, imposing new sanctions on four companies and associated oil tankers accused of operating within Venezuela’s oil sector.
The U.S. move effectively tightens a blockade on Venezuelan crude shipments, preventing sanctioned vessels from entering or leaving the country. As a result, state oil firm PDVSA has been forced to adopt emergency measures to avoid shutting down refining units amid rising residual fuel inventories.
Despite the early gains, oil prices remain under pressure after both Brent and WTI ended 2025 with losses of nearly 20 per cent, their worst annual performance since 2020. Brent crude also recorded its third consecutive yearly decline, the longest losing streak on record.
Analysts say price movements remain subdued as markets weigh short-term geopolitical risks against longer-term fundamentals pointing to an oversupplied market.
In the United States, crude oil production climbed to a record 13.87 million barrels per day in October, according to the Energy Information Administration (EIA). The agency also reported a decline in crude inventories last week, while gasoline and distillate stocks increased due to strong refinery activity.
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