Oil prices fell sharply on Friday as traders weighed expectations of a global supply surplus against easing geopolitical tensions, including hopes of progress toward a peace deal between Ukraine and Russia.
Brent crude slipped $1.03, or 1.65%, to $61.21 a barrel by midday in New York, while U.S. West Texas Intermediate dropped $1.05, or 1.8%, to $57.30. Despite recent support from supply disruptions, both benchmarks are heading for their steepest annual losses since 2020. Brent is down about 18% this year and WTI nearly 20%.
Rising production has fuelled concerns of an oil glut next year. The International Energy Agency estimates global supply will exceed demand by 3.84 mln barrels per day in 2026.
Markets are closely monitoring developments in the Russia-Ukraine peace process. A potential agreement could pave the way for sanctions relief on Russian oil exports, adding further supply pressure. Ukrainian President Volodymyr Zelenskiy is expected to meet US President Donald Trump this weekend to discuss key issues including territorial disputes.
A Kremlin official confirmed contacts with the U.S. administration after Moscow received proposals related to a possible settlement.
Analysts also noted high global oil inventories and limited progress in peace talks as ongoing headwinds. Meanwhile, Washington has instructed its military to focus on restricting Venezuelan oil exports for at least two months, though analysts said the move is unlikely to significantly affect global crude prices.
Separate U.S. military action against Islamic State targets in Nigeria was also seen as having little impact on oil markets, as the country’s major oil infrastructure is located far from the affected areas.
