Oil prices saw little change in Asian trading on Wednesday, heading for their biggest annual losses since 2020, as persistent oversupply concerns dominated markets all year despite recurring geopolitical risks providing only sporadic support.
As of 08:48 Saudi time, Brent crude futures for March expiry were steady at $61.27 a barrel, while West Texas Intermediate crude futures were also steady at $57.89 a barrel.
Both benchmarks are expected to end 2025 with sharp declines, with Brent down about 18% and West Texas Intermediate down about 20%, marking their biggest annual percentage drop since the demand shock caused by the COVID-19 pandemic five years ago.
Oil prices under pressure due to concerns about oversupply.
The heavy losses reflected growing concerns about oversupply, driven largely by OPEC+ moves to undo production cuts that had supported prices in previous years.
After curbing production for most of 2023 and 2024, the group of producers gradually eased voluntary cuts in 2025, adding more barrels to an already saturated market.
Those increases, along with continued strong production from outside OPEC and slower-than-expected global demand growth, weighed on crude oil prices throughout the year.
Investors are now looking ahead to the OPEC+ meeting scheduled for January 4, which will be held via video conference, where producers are expected to review market conditions and discuss production policy for the beginning of 2026.
Geopolitical risks provided intermittent support.
Geopolitical tensions provided temporary boosts during the year, although their impact was short-lived. Attacks on Russian energy infrastructure amid the war in Ukraine raised recurring concerns about supply disruptions.
The Israeli-Palestinian conflict and tensions between the United States and Iran have also flared up at times, renewing concerns about the potential disruption of oil flows from the Middle East.
Separately, tensions between Washington and Caracas added uncertainty to Venezuelan exports, briefly supporting prices.
However, these supply-related risks have been repeatedly overshadowed by the broader narrative of abundant global supply and high inventories.
Recently, the United Arab Emirates announced it would withdraw its troops from Yemen following tensions with its Gulf ally Saudi Arabia over military operations in the war-torn country. Both Saudi Arabia and the UAE are key members of OPEC.
