Investors and economists worldwide are focused on the upcoming OPEC+ meeting, scheduled to be held online on January 4th, as energy markets begin 2026 with caution and anticipation. This meeting comes at a critical juncture, as the alliance, comprising the Organization of the Petroleum Exporting Countries (OPEC) and its independent allies, seeks to stabilize the market and address the growing challenges that are putting downward pressure on prices.
A rocky start and price declines
Oil prices saw a notable decline in the first trading session of 2026, with Brent crude futures falling 10 cents to settle at $60.75 a barrel, and West Texas Intermediate crude dropping by the same amount to $57.32 a barrel. This decline extends the negative performance of the previous year, with markets suffering their biggest annual loss since 2020, a decline of nearly 20%. This marks the third consecutive year that Brent closed lower, the longest losing streak for this benchmark crude.
The geopolitical landscape and its limited impact
Despite ongoing geopolitical tensions, their impact on prices has been limited compared to concerns about oversupply. In Europe, Russia and Ukraine traded accusations of launching attacks at the start of the new year, with Kyiv intensifying its strikes on Russian energy infrastructure to undermine Moscow's military funding. Despite intensive talks led by US President Donald Trump to end the nearly four-year-long war, markets have not reacted strongly, as economic concerns, tariffs, and Venezuelan exports have overshadowed the political risk premium.
Supply surplus and OPEC+ strategies
Analysts believe that the biggest challenge facing OPEC+ is balancing supply and demand amid expectations of a supply surplus. In this context, Phil Flynn, a senior energy analyst, noted that the market appears unaffected by geopolitical concerns, asserting that prices have become trapped in a long-term trading range with a conviction that there will be sufficient supply regardless of events.
For its part, traders expect the alliance to continue its cautious policy, with a senior analyst at a major company suggesting that OPEC+ will decide to temporarily extend the suspension of production increases during the first quarter of 2026. This year will be pivotal in assessing the alliance's ability to balance the market, especially with indications that China, the largest oil importer, will continue its strategy of raising crude inventories during the first half of the year, which could provide relative support for global demand.
