At the beginning of the new year, oil prices stabilized, traders weighed the OPEC+ meeting and geopolitical risks.

After experiencing the largest annual decline since 2020, oil prices stabilized on the first trading day of 2026 as traders weighed the upcoming OPEC+ meeting and geopolitical concerns. As of the time of writing, WTI crude oil futures were trading at $57.46 per barrel, while Brent crude oil futures were trading at $60.91 per barrel. With increased oil supply from OPEC+ and its competitors, coupled with a slowdown in global demand growth, oil prices fell by nearly 20% in 2025, marking the largest annual decline since 2020. Key OPEC+ members, led by Saudi Arabia and Russia, are set to hold their monthly video conference on January 4th. Three sources revealed that against the backdrop of increasingly clear signs of global oil supply surplus, OPEC+ is expected to stick to its plan to pause production increases at their meeting this weekend. In April last year, OPEC+ suddenly began accelerating the resumption of oil production that had been paused since 2023, shocking the market. Officials stated that this move was aimed at regaining market share lost to competitors such as American shale oil producers and punishing OPEC+ member countries that ignored production quotas. However, due to expectations of oversupply leading to prolonged low oil prices, OPEC+ decided in November to pause production increases in the first quarter of this year after increasing production by 137,000 barrels per day in December. OPEC+'s meeting this weekend comes amid escalating geopolitical uncertainty in the global oil market. Pressured by the Trump administration's sanctions, Venezuela's state-owned refineries have faced the dilemma of running out of storage space and accumulating backlog inventories, leading PDVSA to initiate the shutdown of some oil wells within the country on December 28th. Russia's oil infrastructure and tankers have been targets of attacks by Ukraine, with an attack at the end of November damaging a key export terminal for the Caspian Pipeline Consortium (CPC) in the Black Sea region, blocking most of Kazakhstan's oil exports. Both Venezuela and Kazakhstan are OPEC+ member countries. Additionally, with the political situation in Yemen escalating, there has been rare public tension between OPEC+'s leading members, Saudi Arabia and the UAE. Interestingly, Wall Street is generally pessimistic about the outlook for global oil demand in 2026, expecting significant oversupply next year. According to average forecasts from Bank of America, Citigroup, Goldman Sachs, JPMorgan, and Morgan Stanley, Brent crude oil futures prices are expected to further decline to around $59 per barrel in 2026. However, OPEC maintained its forecast of relatively strong growth in oil demand this year in a report released earlier in December. The report stated that the alliance does not anticipate a "surplus" of supply in the market outlook and insists that the market remains "fundamentally balanced" with demand steadily growing. OPEC predicts that global market demand for OPEC+ oil will average 42.6 million barrels per day in the first quarter of 2026, with an average demand of around 43 million barrels per day for the full year. OPEC also maintains its unchanged forecasts for global oil demand growth in 2025 and 2026, stating that the world economy remains on a resilient track for oil demand growth.