By: Economy Middle east

Oil prices inched higher on Friday following their steepest yearly decline since 2020, as drone attacks by Ukraine hit Russian oil infrastructure and a U.S. blockade weighed on Venezuela’s exports. On the first day of trade in 2026, investors balanced emerging geopolitical risks against expectations that OPEC+ will stick to its existing supply strategy at a meeting later this week.

As of 5:03 GMT, Brent crude futures rose 24 cents or 0.39 percent to $61.09 a barrel, while U.S. West Texas Intermediate gained 25 cents or 0.44 percent to $57.67 a barrel.

Geopolitical tensions support crude

Oil prices kicked off 2026 higher as Russia and Ukraine exchanged accusations of targeting civilians on New Year’s Day, even as talks led by U.S. President Donald Trump sought to end the nearly four-year conflict. In recent months, Kyiv has stepped up attacks on Russian energy infrastructure in an effort to disrupt Moscow’s funding for its military operations in Ukraine.

In the latest move by the Trump administration to ramp up pressure on Venezuelan President Nicolas Maduro, Washington on Wednesday sanctioned four companies and their affiliated oil tankers accused of operating in Venezuela’s oil industry.

The U.S. blockade is intended to prevent sanctioned vessels from entering or exiting the country, forcing state-owned PDVSA to take drastic measures to keep refineries running as residual fuel stockpiles rise.

OPEC+ to pause output increases in Q1

Oil prices posted a nearly 20 percent annual decline in 2025, their sharpest drop since 2020, as worries over oversupply and tariffs outweighed geopolitical tensions. 2025 also marked Brent’s third consecutive year of losses, the longest losing streak on record.

The limited moves in oil prices underscored a tug-of-war between near-term geopolitical tensions and longer-term market fundamentals pointing to oversupply ahead of next week’s OPEC+ meeting. The Organization of the Petroleum Exporting Countries and its allies are set to meet virtually on January 4, with traders largely expecting the group to extend its pause on output increases into the first quarter.

OPEC+ agreed late last year to halt planned supply increases for early 2026 in a bid to shore up oil prices after sharp declines in crude benchmarks. Markets expect the group to reaffirm that position, with little appetite to add barrels to an already well-supplied market.

U.S. oil output rose to a record 13.87 million barrels per day in October, the Energy Information Administration said on Wednesday. The agency also reported that crude inventories declined last week, while gasoline and distillate stockpiles increased amid strong refining activity.