Muscat: Brent crude futures declined nearly 18 per cent in 2025, the steepest annual fall since 2020, and are heading for a third straight year of losses. The March Brent contract, expiring on Wednesday, slipped six cents to $61.27 a barrel. US benchmark West Texas Intermediate also edged lower by five cents to $57.90 a barrel and is set to end the year down about 15 per cent.

Oil markets began the year on a strong note after former US President Joe Biden imposed tougher sanctions on Russia, disrupting crude supplies to China and India. Prices were further supported as the war in Ukraine intensified, with drone attacks damaging Russian energy infrastructure and affecting Kazakhstan’s oil exports.

Tensions in the Middle East also fuelled volatility. A 12-day conflict between Iran and Israel in June raised fears of supply disruptions through the Strait of Hormuz, while US President Donald Trump later ordered a blockade on Venezuela’s oil exports and warned of further action against Iran.

However, prices came under sustained pressure as the OPEC+ alliance accelerated production increases and concerns grew over the impact of higher US tariffs on global economic growth and fuel demand. Since April, the group has released about 2.9 million barrels per day into the market and has now decided to suspend further output hikes in the first quarter of 2026. Its next policy meeting is scheduled for January 4.

Looking ahead, analysts broadly expect supply to exceed demand in 2026. The International Energy Agency forecasts a surplus of about 3.84 million barrels per day, while Goldman Sachs estimates excess supply closer to 2 million barrels per day, keeping pressure on oil prices despite ongoing geopolitical risks.