Summary
- Oil heading for largest annual decline since 2020
- US targets Islamic State militants in Nigeria, no direct impact on oil infrastructure
- Venezuelan oil under US economic pressure
(Reuters) – Oil prices were stable on Friday as investors weighed potential supply risks from developing geopolitical tensions in a thinly attended post-Christmas session, after the U.S. carried out airstrikes against Islamic State militants in Nigeria and added greater economic pressure on Venezuelan oil.
Brent crude futures fell 16 cents, or 0.26%, to $62.08 per barrel by 1148 GMT. U.S. West Texas Intermediate (WTI) crude was down 7 cents, or 0.12%, at $58.28.
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Oil prices are on course for their steepest annual decline since 2020, with Brent and WTI down 17% and 19% respectively versus the final close of 2024. Rising oil output from both the OPEC+ group and non-OPEC states has raised concerns of a market in surplus heading into next year.
The U.S. on Thursday carried out a strike against Islamic State militants in northwest Nigeria’s Sokoto state in coordination with the Nigerian government, U.S. President Donald Trump said.
“Nigerian strikes touted by Trump are targeting Islamic State and not specifically impacting any crude pipelines or oil terminals. Thus traders are staying on the sidelines in this thin liquidity market on Boxing Day,” said June Goh, senior oil market analyst at Sparta Commodities.
Major oil producer Nigeria’s oilfields and export infrastructure are mainly located in the south of the country.
The White House ordered its military forces to focus on a “quarantine” of Venezuelan oil for at least the next two months, indicating Washington is currently more interested in using economic rather than military means to pressure Caracas.
“Due to the Christmas holiday closure, year-end market activity remained relatively subdued,” said Tong Chuan, an analyst at Galaxy Futures. “Supply-side disruptions have become the primary driver of oil prices.”
Investors will also be watching for developments in the Russia-Ukraine peace process and the possible impact on future oil prices, as a peace agreement could lead to the removal of international sanctions against Russia’s oil sector.
Russian President Vladimir Putin’s foreign policy aide spoke to members of the U.S. administration after Moscow received proposals about a possible peace deal, the Kremlin said on Friday.
Putin indicated Russia might be open to a territory swap as part of a peace deal in a briefing to top Russian business leaders, the Kommersant newspaper reported.
Ukraine’s President Volodymyr Zelenskiy said on Friday that a lot can be decided before the New Year and that he hopes to meet with Trump soon. Axios reported the two leaders will meet on Sunday at Mar-a-Lago, citing a Ukrainian official, though Reuters could not immediately verify the statement.
Reporting by Robert Harvey in London and Sudarshan Varadhan in Singapore; Editing by Muralikumar Anantharaman and Joe Bavier
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