Oil prices just closed out 2025 with their worst yearly drop since 2020, and the story is pretty clear: there’s too much oil and not enough demand.
As markets moved into 2026, trading was quiet because of the New Year holiday. That low activity showed up in prices. Brent crude finished the year at about $60.91 a barrel, while U.S. oil, known as West Texas Intermediate, ended at $57.42 a barrel.
For the full year, oil prices fell by nearly 20%. That’s a big hit, especially in a year filled with wars, rising political tensions, new trade tariffs, and ongoing sanctions on countries like Russia, Iran, and Venezuela. Even with all that chaos, prices still dropped.
One major reason is supply. The OPEC+ alliance kept pumping more oil into the market, creating a surplus. At the same time, global economic growth slowed, which meant people and businesses used less fuel than expected.
Brent crude lost about 19% during 2025. That makes it the third year in a row prices have fallen — the longest losing streak the oil market has ever seen. U.S. oil didn’t do any better, dropping close to 20% as well.
As 2026 begins, the oil market is facing a tough question: will demand pick up, or will too much supply keep prices under pressure? For now, oil is starting the new year on shaky ground.
