Oil prices finished sharply lower on Saturday, dropping more than 2%, as traders focused on one big concern: too much oil and not enough demand.
Brent crude fell $1.60, or 2.57%, to settle at $60.64 a barrel. U.S. oil, known as WTI, dropped $1.61, or 2.76%, to $56.74 a barrel.
Even though prices bounced a bit earlier this month after supply disruptions, oil is still heading toward its worst yearly decline since 2020. So far this year, Brent is down about 19%, and WTI is down around 21%. The main reason is simple—global oil production keeps rising, and the market is worried about a serious supply glut going into next year.
Analysts at Aegis Hedging summed it up clearly. They said geopolitical tensions may support prices in the short term, but they don’t change the bigger picture: the world has too much oil.
That view is backed by the International Energy Agency. In its December report, the IEA said global oil supply in 2026 is expected to exceed demand by nearly 3.84 million barrels per day.
At the same time, investors are watching political developments closely, especially talks around a possible peace deal between Russia and Ukraine. Any agreement could eventually lead to sanctions being lifted on Russian oil, which would add even more supply to an already crowded market.
Ukrainian President Volodymyr Zelenskiy is set to meet U.S. President Donald Trump in Florida this weekend. Zelenskiy said important decisions could happen before the New Year, including discussions around territory and security guarantees. He also said he would consider a national referendum if Russia agrees to a ceasefire.
Russia confirmed that it has already received peace proposals from the U.S., and that talks between officials from both sides have taken place.
For oil traders, this progress is another downside risk. As Dennis Kissler of BOK Financial explained, high global oil inventories and even small steps toward peace are weighing on prices.
There’s also some attention on Venezuela, after the White House ordered U.S. forces to focus on blocking sanctioned Venezuelan oil shipments for the next two months. Still, analysts say this is unlikely to have a major impact on global prices.
In the end, the market keeps coming back to the same issue. Headlines may move prices day to day, but the real pressure comes from rising supply, growing stockpiles, and weak demand growth. Until that changes, oil prices are likely to stay under stress.
