(Investing)– Oil prices were trading modestly higher on Wednesday but still heading toward their steepest annual losses since 2020, as persistent supply surplus concerns dominated markets through the year despite recurring geopolitical risks that offered only intermittent support.
As of 05:30 ET (10:30 GMT), expiring in March traded rose 0.2% to $61.47 per barrel, while West Texas Intermediate (WTI) crude futures were also higher 0.2%, exchanging hands at $58.11 per barrel.
Both benchmarks are set to end 2025 sharply lower, with Brent down about 18% and WTI on track for a near 20% decline, marking their biggest annual percentage falls since the COVID-19 demand shock five years ago.
Oil pressured by supply surplus risks
The heavy losses reflected mounting concerns over excess supply, driven largely by moves from OPEC+ to unwind production cuts that had supported prices in previous years.
After holding back output for much of 2023 and 2024, the producer group gradually eased voluntary curbs in 2025, adding more barrels to an already well-supplied market.
Those increases, combined with resilient non-OPEC output and slower-than-expected global demand growth, weighed heavily on crude prices throughout the year.
Investors are now looking ahead to an OPEC+ meeting scheduled for Jan. 4, to be held via video conference, where producers are expected to review market conditions and discuss output policy for early 2026.
Geopolitical risks provided intermittent relief
Geopolitical tensions provided occasional relief rallies during the year, though their impact proved short-lived. Attacks on Russian energy infrastructure amid the war in Ukraine periodically raised fears of supply disruptions.
Israel-Hamas conflict and tensions between the U.S. and Iran also flared at times, renewing concerns over potential disruptions to Middle Eastern oil flows.
Separately, strains between Washington and Caracas added uncertainty around Venezuelan exports, briefly supporting prices.
However, these supply risks were repeatedly overshadowed by the broader narrative of ample global supply and rising inventories.
Most recently, the United Arab Emirates said it would pull its forces out of Yemen after tensions flared with Gulf ally Saudi Arabia over military operations in the war-torn country. Both Saudi Arabia and the UAE are key members of OPEC.
