Finance
Oil settles near five-year low amid ample supply, Russia-Ukraine progress
Published by Global Banking & Finance Review®
Posted on December 16, 2025
2 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on December 16, 2025
2 min readLast updated: January 20, 2026
Oil prices fell to a five-year low due to oversupply concerns and potential progress in Russia-Ukraine peace talks, impacting global markets.
By Liz Hampton and Seher Dareen
DENVER, Dec 16 (Reuters) - Oil futures settled at their lowest level since February 2021 on Tuesday amid ongoing jitters surrounding oversupply and as the prospect of a Russia-Ukraine peace deal appeared to strengthen, raising expectations sanctions could be eased.
Brent crude futures settled down $1.64 a barrel, off roughly 2.71%, to $58.92 a barrel, while U.S. West Texas Intermediate crude closed at $55.27, down $1.55, or 2.73%.
"Brent has dropped this morning to below $60 per barrel for the first time in months, as the market assesses a potential peace deal resulting in additional Russian volumes becoming available and oversupplying the market further," said Rystad analyst Janiv Shah.
The U.S. offered to provide NATO-style security guarantees for Kyiv and European negotiators reported progress in talks on Monday, sparking optimism that an end to the war was closer.
Russia, meanwhile, said it was not willing to make any territorial concessions, state news agency TASS quoted Deputy Foreign Minister Sergei Ryabkov as saying.
The six-month Brent futures spread moved into a contango for the first time since October.
Barclays analysts expect Brent to average $65/bbl in 2026, slightly ahead of the forward curve, due to the expected 1.9 million bpd surplus they see as being priced in already.
“This price decline underscores the structural dynamics of today’s energy market—ample supply and sluggish demand. Unless geopolitical risks or policy shifts intervene, this softness could persist well into next year," KPMG U.S. Energy Strategy Leader Angie Gildea wrote in a note.
Adding to the pressure, soft Chinese economic data on Monday further fuelled concerns that global demand may not be strong enough to absorb recent supply growth, said IG market analyst Tony Sycamore.
China's factory output growth slowed to a 15-month low, official data showed. Retail sales also grew at their slowest pace since December 2022, during the COVID-19 pandemic.
Fears of an oversupply were marginally offset by the U.S. seizing an oil tanker off Venezuela last week, but traders and analysts said a glut of floating storage and a surge in Chinese buying from Venezuela in anticipation of sanctions were also limiting the market impact.
(Reporting by Seher Dareen in London, Colleen Howe in Beijing and Emily Chow in Singapore; Editing by Alexander Smith and Nick Zieminski)
Brent crude oil is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for oil prices globally and is used to price two-thirds of the world's oil.
Contango is a market condition where the futures price of a commodity is higher than the expected spot price at contract maturity. It often indicates that supply exceeds demand in the market.
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