Oil prices didn’t move much on Wednesday, but 2025 is ending as a rough year for the market. Overall, oil prices are down more than 15% this year as supply kept growing faster than demand, even with wars, sanctions, and global tensions.
Brent crude is now close to an 18% loss for the year, which makes this its worst annual drop since 2020. It’s also heading for its third year in a row of losses — something that’s never happened before. The March Brent contract rose slightly to about $61.44 a barrel early Wednesday.
Analysts say prices could dip even more before stabilizing. Jason Ying from BNP Paribas thinks Brent could fall to around $55 a barrel in the first few months of next year, then recover to about $60 for most of 2026. He says U.S. shale producers are part of the reason. They locked in high prices earlier, so they’ll keep pumping oil even if prices fall.
U.S. oil isn’t doing much better. West Texas Intermediate is sitting near $58 a barrel and is on track for a nearly 19% drop this year. Average oil prices in 2025 are the lowest we’ve seen since 2020.
At the start of the year, oil prices were strong. Tough sanctions on Russia disrupted supplies to big buyers like China and India. The war in Ukraine intensified, Russian energy facilities were hit, and oil exports from Kazakhstan were affected. A short but intense conflict between Iran and Israel also raised fears about shipping through the Strait of Hormuz, pushing prices higher.
Tensions didn’t stop there. Saudi Arabia and the UAE clashed with Yemen, the U.S. moved to block Venezuelan oil exports, and President Donald Trump threatened further action against Iran. All of this kept oil markets on edge.
But later in the year, prices cooled off. OPEC+ increased production, adding millions of barrels per day to the market. At the same time, worries about U.S. tariffs and slower global growth hurt fuel demand.
OPEC and its allies have now paused further production increases for the first quarter of 2026 after already releasing about 2.9 million barrels per day since April. Their next meeting is set for January 4.
Most analysts expect oil supply to keep beating demand next year. Some estimates show an oversupply of nearly 4 million barrels per day. Others see it closer to 2 million.
Experts say if prices drop into the low $50s, OPEC+ may be forced to cut production again. If prices stay where they are, production cuts will likely continue to be rolled back.
Even with all the extra oil on the market, some believe geopolitics will keep prices from falling too far. Conflicts, sanctions, and unpredictable political moves — especially from the U.S. — could act as a safety net for prices.
As one analyst put it, the world is sitting on a powder keg. Supply may be high, but global tensions could be the one thing that stops oil prices from collapsing completely.
