Oil Prices Drop 2% on Supply Glut Fears, Ukraine Talks

By Staff, Agencies

Oil prices settled more than 2% lower on Friday as concerns over a global oil supply glut weighed on markets, even as attention turned to upcoming talks between Ukrainian President Vladimir Zelensky and US President Donald Trump.

Brent crude futures fell by $1.60, or 2.57%, to close at $60.64 per barrel. Meanwhile, US West Texas Intermediate [WTI] crude dropped by $1.61, or 2.76%, settling at $56.74 per barrel.

While recent supply disruptions briefly lifted oil prices from five-year lows recorded in mid-December, both Brent and WTI remain on track for their sharpest annual losses since 2020.

Brent is down 19% this year, and WTI has dropped 21%, largely due to sustained overproduction. “Geopolitical premiums have provided near-term price support, but have not materially shifted the underlying oversupply narrative,” analysts at Aegis Hedging wrote in a market note.

According to the International Energy Agency’s [IEA] December report, global oil supply is expected to exceed demand by 3.84 million barrels per day in the coming year, intensifying pressure on producers and traders.

Investors are closely watching developments in the Russia-Ukraine conflict, as progress toward a peace deal could result in the lifting of international sanctions against Russia’s oil sector.

Zelensky is set to meet Trump in Florida on Sunday, where both leaders will discuss a 20-point peace framework and a proposed security guarantees agreement. Territorial issues remain the core obstacle in negotiations. "A lot can be decided before the New Year," Zelensky told reporters when announcing the meeting, expressing openness to a national referendum if Russia agrees to a ceasefire.

Russian officials confirmed that the Kremlin had received new proposals from the US and held direct communication with American representatives about the possible terms of a peace deal.

In parallel, the White House has ordered a two-month military "quarantine" on Venezuelan oil, focusing on economic means to curtail exports rather than confrontation. However, analysts say the global impact remains minimal. “The negatives remain of elevated global oil storage, and slight progress on Ukraine-Russia peace talks,” said Dennis Kissler, Senior VP of Trading at BOK Financial.

Despite tensions involving Venezuela, analysts at Aegis Hedging maintain that the broader market remains focused on oversupply and waning demand growth heading into the new year.