Oil set for biggest annual drop since 2020

Oil prices crept higher on Wednesday, while heading for a fall of more than 15% over the course of 2025, as expectations of oversupply increased in a year marked by wars, higher tariffs, increased Opec+ output and sanctions on Russia, Iran and Venezuela.

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Brent crude futures, down nearly 18% - the most substantial annual percentage decline since 2020 - are on track for a third straight year of losses, their longest losing streak to date. US West Texas Intermediate crude headed for a 19% annual decline.

BNP Paribas commodities analyst Jason Ying anticipates Brent will dip to $55 a barrel in the first quarter before recovering to $60 a barrel for the rest of 2026 as supply growth normalises and demand stays flat.

"The reason why we're more bearish than the market in the near term is that we think that US shale producers were able to hedge at high levels," he said.

"So the supply from shale producers will be more consistent and insensitive to price movements." The 2025 average prices for both benchmarks are the lowest since 2020, LSEG data showed. Brent futures rose 21 cents to $61.54 a barrel at 1150 GMT, while US West Texas Intermediate crude was at $58.16, up 21 cents. US crude and fuel inventories rose last week, market sources said, citing American Petroleum Institute figures on Tuesday. The US Energy Information Administration will release its data later on Wednesday.