Oil prices head for biggest annual fall since 2020 on oversupply fears

Oil prices crept higher on Wednesday while heading for a fall of more than 15 per cent over the course of 2025, as expectations of oversupply increased in a year marked by wars, higher tariffs, increased OPEC+ output and sanctions on ‍Russia, Iran and Venezuela.

Brent crude futures, down over 17 per cent - ​the most substantial annual percentage decline since 2020 - are on track for a third straight year of losses, their longest losing streak to date. U.S. West Texas Intermediate crude headed for a near 19 per cent annual decline.

BNP Paribas commodities analyst Jason Ying anticipates Brent will dip to $55 a barrel in the first quarter before recovering to $60 a barrel for the rest of 2026 as supply growth normalises and demand stays flat.

"The reason why we're more bearish than the market in the near term is that we think that U.S. shale producers were able to hedge at high levels," he said.

"So the ​supply from shale producers will be more consistent and insensitive to price movements."