Shafaq News / The oil market is heading towards its largest annual decline, about 10% lower, since 2020, as the ongoing conflict and "OPEC+" production cuts fail to bolster prices. Traders are concerned that global crude supplies might continue to outpace demand in the coming quarters.

According to Reuters, Brent crude futures were up 18 cents, or 0.2%, at $77.33 a barrel at 0126 GMT on Friday, the last trading day of 2023, while the U.S. West Texas Intermediate (WTI) crude futures were trading 11 cents higher at $71.88 a barrel in early Asian trade.

At these levels, both benchmarks are on track to close at the lowest year-end levels since 2020, when the pandemic battered demand and sent prices nosediving.

Oil is also on track to fall for the third straight month due to demand concerns outweighing the risks to supply from the Middle East conflict, and as production cuts have proved insufficient to prop up prices, with the benchmarks declining nearly 20% from their highest level this year.

Prices had surged to this year-high in September after the Organization of the Petroleum Exporting Countries and their allies agreed to cut production, triggering fears that demand was potentially higher than supply.

On Friday, oil prices stabilized after falling 3% the previous day as more shipping firms prepared to transit the Red Sea route. Major firms had stopped using Red Sea routes after Yemen's Houthi militant group began targeting vessels.

Measures by governments and central banks across the world to arrest high inflation also kept a lid on oil prices and quickly offset any price spikes.

However, expected interest rate cuts in major consuming regions in 2024 and a weaker dollar are seen boosting oil demand, investors and analysts say.