Oil edges higher following biggest annual loss since 2020

By Florence Tan

SINGAPORE, Jan 2 (Reuters) - Oil prices edged up on the first day of trade in 2026 after last year posting their biggest annual loss since 2020, as Ukrainian drones targeted Russian oil facilities and a U.S. blockade pressured Venezuela's exports.

Brent crude futures climbed 14 cents on Friday to $60.99 a barrel by 0146 GMT, while U.S. West Texas Intermediate crude was at $57.56 a barrel, up 14 cents.

Russia and Ukraine have traded allegations of attacks on civilians on New Year's Day despite the intensive talks overseen by U.S. President Donald Trump that are aimed at bringing an end to the nearly four-year-old war.

Kyiv has been intensifying strikes against Russian energy infrastructure in recent months, aiming to cut off Moscow's sources of financing for its military campaign in Ukraine.

And in the latest action by President Trump's administration to increase pressure on Venezuelan President Nicolas Maduro, Washington on Wednesday imposed sanctions on four companies and associated oil tankers it said were operating in Venezuela’s oil sector.

The U.S. blockade aims to keep sanctioned tankers from entering or leaving Venezuela and is forcing state energy company PDVSA to resort to extreme solutions to avoid shutting down refining units as residual fuel inventories build up.

The Brent and WTI benchmarks recorded annual losses of nearly 20% in 2025, the steepest since 2020, as concerns about oversupply and tariffs outweighed geopolitical risks. It was the third straight year of losses for Brent, the longest such streak on record.

In the United States, oil production hit a record high of 13.87 million barrels per day in October, according to the Energy Information Administration on Wednesday. Crude stocks fell while gasoline and distillate inventories rose last week on robust refining activity, the EIA reported.

(Reporting by Florence Tan; Editing by Tom Hogue)