Oil slides over 2% on oversupply fears, Ukraine peace hopes

Oil prices settled more than 2 percent lower on Friday as investors focused on the prospect of a growing global supply glut, while also monitoring signs of progress toward a possible peace deal between Ukraine and Russia ahead of weekend talks between Ukrainian President Volodymyr Zelenskiy and US President Donald Trump.

Brent crude futures fell $1.60, or 2.57 percent, to settle at $60.64 per barrel, while US West Texas Intermediate crude dropped $1.61, or 2.76 percent, to $56.74.

Although recent supply disruptions had helped prices recover from near five-year lows hit on December 16, oil is now heading for its steepest annual decline since 2020. For the year, Brent is down 19 percent and WTI has fallen 21 percent, as rising output fuels concerns of oversupply in 2026.

Analysts at Aegis Hedging said geopolitical risks have offered some short-term support, but have not changed the broader oversupply outlook. The International Energy Agency estimates global oil supply will exceed demand by about 3.84 million barrels per day next year.

Elevated global oil inventories and modest progress in Ukraine-Russia peace efforts continue to weigh on prices, according to market analysts. Meanwhile, US efforts to economically pressure Venezuela by restricting sanctioned oil flows are seen as having limited impact on global crude markets, leaving surplus concerns as the dominant theme.