Oil posts sharpest yearly drop since pandemic

Saturday, 3 January 2026 00:38 - - {{hitsCtrl.values.hits}}

Oil prices recorded their steepest annual decline since the COVID-19 pandemic in 2025, with markets facing continued pressure from excess supply as producers pump more crude than the global economy requires.

Crude prices fell by nearly 20% over the year, marking the largest annual drop since 2020 and the first instance of three consecutive years of yearly declines for the oil market.

The persistent weakness came despite ongoing geopolitical tensions in key energy-producing regions, as analysts pointed to a heavily oversupplied market overwhelming any risk premium.

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Prices slipped below $ 60 a barrel for the first time in almost five years last month, as expectations grew around a potential Russia-Ukraine peace agreement, which could add to global supply if Western sanctions on Russian exports are eased.

The International Energy Agency forecasts that oil supply will exceed demand by about 3.8 million barrels per day this year, even after OPEC decided recently to postpone any production increases until after the first quarter.

OPEC typically seeks to manage output to keep prices within a “Goldilocks” range—high enough to sustain producer revenues, but not so elevated that consumers shift more rapidly to alternatives such as electric vehicles and heat pumps.

Brent crude settled at $ 60.85 a barrel on the final trading day of 2025, down sharply from nearly $ 74 at the end of 2024. US crude also slid around 20% over the year, closing at $ 57.42 on Wednesday, compared with about $ 74 a year earlier.