Oil prices inched higher in early Asian trading on January 2, the first trading session of 2026, as geopolitical tensions continued to provide support after the major benchmarks posted their steepest annual losses since 2020.
At the time of writing, Brent crude was up 0.30% at $61.03 per barrel, while U.S. West Texas Intermediate had climbed 0.30% to $57.59 per barrel.
The gains follow a turbulent 2025 in which both benchmarks fell by nearly 20%, marking their worst annual performance since the pandemic-driven collapse in 2020.
Prices found early support after both Ukraine and Russia exchanged allegations of attacks on both civilians and infrastructure over the New Year. Zelensky said on Telegram that Russia had launched more than 200 drones targeting power infrastructure across seven regions, while Russian authorities reported drone strikes on energy and industrial facilities in several regions inside Russia.
Additional upward pressure came from tightening U.S. measures against Venezuela’s oil sector. Washington this week imposed sanctions on four companies and associated oil tankers accused of operating within Venezuela’s sanctioned oil trade. The measures effectively block sanctioned vessels from entering or leaving Venezuelan ports, further constraining exports.
The restrictions are already forcing state oil company PDVSA to shut wells producing extra-heavy crude in the Orinoco Belt as storage space is filling up.
With global supply remaining ample and demand growth uncertain, near-term geopolitical risks appear to be the only truly bullish factors that could counter the broader structural pressures that dominated oil markets throughout 2025.
By Charles Kennedy for Oilprice.com
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