10-K: Brent Oil Fund Reports 2025 Decline Amid Supply Growth

United States Brent Oil Fund, LP (BNO) reported a 6.14% decrease in its per share net asset value for the year ended December 31, 2025, primarily due to lower Brent crude oil prices and increased supply.

Summary

• BNO's investment objective is for the daily percentage changes in its per share net asset value (NAV) to reflect the daily changes in the spot price of Brent crude oil, as measured by a specified short-term futures contract (Benchmark Futures Contract), plus interest earned, less expenses.
• The fund primarily invests in futures contracts for crude oil, heating oil, gasoline, natural gas, and other petroleum-based fuels, and to a lesser extent, other crude oil-related investments.
• For the 30-valuation days ended December 31, 2025, the average daily change in the Benchmark Futures Contract price was (0.128)%, while BNO's average daily NAV change was (0.118)%, resulting in an average daily difference of 0.01%.
• Since its public offering commencement on June 2, 2010, to December 31, 2025, the average daily change in the Benchmark Futures Contract was 0.026%, and BNO's average daily NAV change was 0.027%, with an average daily difference of 0.001%.
• For the year ended December 31, 2025, BNO's actual total return, as measured by changes in its per share NAV, was (6.14)%, outperforming the expected total return based on the Benchmark Futures Contract of (7.65)% by 1.51%.
• The Benchmark Futures Contract price started 2025 at $74.64 per barrel and ended the year at $60.85 per barrel, representing an (18.48)% decrease.
• During 2025, the Brent crude oil futures market experienced states of backwardation, where near-month contracts traded at a higher price than next-month contracts.
• Global crude oil supplies exceeded demand throughout 2025, with the excess supply widening from 0.6 million barrels per day (mbd) at the end of 2024 to 2.8 mbd by the end of 2025.
• OPEC crude production increased from approximately 27.5 mbd to 29.0 mbd during 2025, with plans to unwind voluntary cuts and increase quotas underway.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative filing due to significant declines in NAV, net income, and average assets, driven by a challenging Brent crude oil market. However, the fund's ability to outperform its benchmark and maintain effective internal controls provides some mitigation.

Positives

• BNO successfully met its investment objective, with the average daily percentage change in its NAV over 30 successive valuation days remaining within plus/minus 10% of the average daily change in the Benchmark Futures Contract.
• BNO's actual total return of (6.14)% for the year ended December 31, 2025, outperformed its benchmark's expected total return of (7.65)% by 1.51%, primarily due to interest income exceeding expenses.
• Management assessed BNO's internal control over financial reporting as effective as of December 31, 2025.
• BNO has not leveraged and does not intend to leverage its assets through borrowings or otherwise, maintaining a conservative investment approach.
• BNO has an unlimited number of shares registered and available for issuance, providing flexibility for growth through Creation Baskets.

Negatives

• BNO's per share NAV decreased by (6.14)% for the year ended December 31, 2025, falling from $30.14 to $28.29.
• The Benchmark Futures Contract price declined by (18.48)% over 2025, indicating a challenging market for Brent crude oil.
• BNO reported a net loss of $(4,092,308) for the year ended December 31, 2025, a significant reversal from the net income of $10,597,827 in 2024.
• Dividend and interest income earned on Treasuries, cash, and cash equivalents decreased substantially to $3,890,307 in 2025 from $7,233,652 in 2024.
• The annualized yield based on average daily total net assets decreased to 4.00% in 2025 from 4.94% in 2024.
• Average daily total net assets declined to $97,180,670 in 2025 from $146,504,989 in 2024.
• USCF and USO are involved in ongoing class action and derivative litigation, which could materially adversely affect USCF's financial condition and divert management attention.
• RBC Capital, one of BNO's FCMs, settled with the SEC for $45 million in August 2024 for records preservation non-compliance and was convicted by a French court on March 5, 2024, for complicity in estate tax fraud.
• ADMIS, another FCM, was fined $650,000 by a Commodity Exchange Panel in January 2020, $500,000 by the CFTC in September 2022, and $450,000 by various Business Conduct Committees in September 2023 for supervision failures and inaccurate reporting.

Risks

• The NAV of BNO's shares relates directly to the value of the Benchmark Futures Contracts and other assets, and price fluctuations could materially adversely affect an investment.
• Price volatility in futures contracts, influenced by factors like natural disasters, public health disruptions (e.g., COVID-19), and international armed conflicts (e.g., Russia-Ukraine war, Middle East conflicts), may cause substantial losses.
• An investment in BNO may provide little or no diversification benefits, as its performance may not be non-correlated with other asset classes during certain periods.
• The market price at which investors buy or sell shares may be significantly less or more than NAV due to supply/demand forces and non-concurrent trading hours between exchanges.
• Daily percentage changes in BNO's NAV may not closely correlate with daily percentage changes in the Benchmark Futures Contract due to market disruptions, regulatory limits, or investment in Other Crude Oil-Related Investments.
• Daily percentage changes in the price of the Benchmark Futures Contract may not correlate with daily percentage changes in the spot price of Brent crude oil.
• Natural forces in the crude oil futures market, known as backwardation and contango, may increase tracking error and/or negatively impact total return, especially prolonged contango.
• Accountability levels, position limits, and daily price fluctuation limits set by exchanges have the potential to cause tracking error by limiting BNO's investments.
• Risk mitigation measures imposed by BNO's Futures Commission Merchants (FCMs) could limit BNO's investments, causing tracking error.
• An investor's tax liability may exceed the amount of distributions, if any, on its shares, as BNO does not intend to make cash distributions.
• An investor's allocable share of taxable income or loss may differ from its economic income or loss on the shares.
• BNO could be treated as a corporation for U.S. federal income tax purposes, which may substantially reduce the value of the shares.
• BNO is subject to credit risk with respect to counterparties to OTC contracts, facing potential non-performance and significant delays in recovery during bankruptcy.
• Valuing OTC derivatives may be less certain than valuing exchange-traded and/or cleared financial instruments.
• BNO's rights under an OTC contract may be restricted by regulations that delay or restrict termination rights or foreclosure upon collateral in resolution or insolvency proceedings.
• The use of swap agreements may expose BNO to early termination risk, potentially resulting in significant losses.
• BNO could become leveraged if it had insufficient assets to completely meet its margin or collateral requirements relating to its investments.
• Certain of BNO's investments could be illiquid, causing large losses, particularly for large positions or in disrupted markets.
• BNO is not actively managed by conventional methods, meaning positions are generally not closed out due to declining value unless for specific reasons.
• BNO may not meet the listing standards of NYSE Arca, which could adversely impact an investor's ability to sell shares.
• The NYSE Arca may halt trading in BNO's shares, adversely impacting an investor's ability to sell shares.
• The liquidity of BNO's shares may be affected by the withdrawal of Authorized Participants, which could adversely affect the market price.
• Limited partners may have limited liability in certain circumstances, including potentially having liability for the return of wrongful distributions.
• USCF's LLC Agreement provides limited authority to Non-Management Directors, and any Director may be removed by USCF's parent company, which is controlled by Nicholas D. Gerber, potentially impacting regulatory obligations.
• There is a risk that BNO will not earn trading gains sufficient to compensate for the fees and expenses it must pay.
• BNO is subject to extensive regulatory reporting and compliance, with potential sanctions for non-compliance.
• Regulatory changes or actions, including new legislation, are impossible to predict but may significantly and adversely affect BNO.
• BNO is not a registered investment company, so shareholders do not have the protections of the 1940 Act.
• Trading in international markets could expose BNO to credit and regulatory risk, exchange-rate movements, exchange controls, expropriation, increased tax burdens, and political instability.
• BNO and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders.
• BNO could terminate at any time, causing the liquidation and potential loss of an investor's investment.
• An unanticipated number of Redemption Basket requests during a short period could have an adverse effect on BNO's NAV.
• The suspension in the ability of Authorized Participants to purchase Creation Baskets could cause BNO's NAV to differ materially from its trading price.
• BNO may be subject to interest rate risk, which may prevent it from investing fully at prevailing rates until current investments mature.
• As inflation increases, the present value of BNO's assets may decline.
• BNO may potentially lose money by investing in government money market funds, as there is no guarantee they will preserve a $1.00 per share value.
• The failure or bankruptcy of a clearing broker could result in a substantial loss of BNO's assets and impair its ability to execute trades.
• The failure or bankruptcy of BNO's Custodian could result in a substantial loss of BNO's assets.
• Competing claims of intellectual property rights may adversely affect BNO.
• Intentional and unintentional cyber-attacks pose operational and information security risks to BNO and its service providers.
• BNO's investment returns could be negatively affected by climate change and greenhouse gas restrictions.
• USCF is the subject of class action, derivative, and other litigation, which could materially adversely affect its financial condition.

Future Outlook

USCF anticipates that interest rates may continue to stagnate in the near future, and that BNO's fees and expenses may be lower than interest earned, potentially leading to outperformance of its benchmark. However, ongoing global tensions and conflicts in various regions are expected to continue raising uncertainty about future crude oil supply and prices. Conversely, any resolution of geopolitical conflicts could ease supply disruptions and price volatility. U.S. crude oil production growth may moderate in the future, influenced more by technology, geology, and economics than political policy. The long-expected reduction of OPEC quotas and voluntary cuts is now underway, which could lower the 'OPEC put' floor on prices.

Management Comments

• "USCF believes that market arbitrage opportunities cause daily changes in BNOs share price on the NYSE Arca on a percentage basis to closely track daily changes in BNOs per share NAV on a percentage basis."
• "USCF further believes that the daily changes in prices of the Benchmark Futures Contract have historically tracked the daily changes in the spot price of Brent crude oil."
• "USCF believes that the net effect of these relationships will be the daily changes in the price of BNOs shares on NYSE Arca on a percentage basis will closely track the daily changes in the spot price of Brent crude oil on a percentage basis, plus interest earned on BNOs collateral holdings, less BNOs expenses."
• "USCF believes that it is not practical to manage the portfolio to achieve such an investment goal when investing in Futures Contracts and Other Crude Oil-Related Investments." (referring to matching nominal price of NAV to spot price)
• "USCF anticipates that interest rates may continue to stagnate over the near future. It is anticipated that fees and expenses paid by BNO may be lower than interest earned by BNO. As such, USCF anticipates that BNO could possibly outperform its benchmark so long as interest earned is greater than the fees and expenses paid by BNO."
• "USCF is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect BNO, including its business strategy, results of operations, or financial condition."

Industry Context

StockSavvy.ai notes that the Brent crude oil market in 2025 was characterized by growing supplies, leading to a significant widening of the excess supply gap from 0.6 mbd at the end of 2024 to 2.8 mbd by the end of 2025. This oversupply contributed to the (18.48)% decline in the Benchmark Futures Contract price. The ongoing unwinding of OPEC+ voluntary cuts, despite reaffirmations of market stability, suggests a shift in the supply-side dynamics that previously supported prices. Geopolitical tensions, such as the Israel-U.S. attacks on Iran's nuclear facilities in June 2025 and ongoing conflicts in Ukraine and the Middle East, continue to introduce volatility and supply risk premiums, preventing a steeper decline in prices. The U.S. becoming the world's largest crude oil producer further reshapes global supply dynamics, though domestic production growth may moderate.

Comparison to Industry Standards

• Brent crude oil futures are noted as the world's second most liquid forum for crude oil trading and the second largest volume futures contract trading on a physical commodity, serving as the price reference for two-thirds of the world's traded oil.
• Over the 10-year period ended December 31, 2025, Brent Oil showed a moderate positive correlation with Large Cap US Equities (S&P 500) at 0.408 and Global Equities (FTSE World Index) at 0.439, suggesting some co-movement but not strong alignment.
• Brent Oil exhibited a negative correlation with US Government Bonds (BEUSG4 Index) at -0.302 over the 10-year period, indicating potential diversification benefits against traditional fixed income assets.
• The correlation between Brent Oil and WTI Crude Oil was very high (0.916 over 10 years, 0.970 over 1 year), confirming Brent's strong relationship with the broader crude oil market.
• Strong positive correlations were observed between Brent Oil and other petroleum-based fuels, such as Unleaded Gasoline (0.798 over 10 years) and Heating Oil (0.768 over 10 years), consistent with integrated energy markets.

Management Changes

Legal Proceedings

• The Optimum Strategies Action, filed April 6, 2022, against USO and USCF alleging securities law violations, was dismissed with prejudice on March 15, 2023.
• USCF and USO settled SEC and CFTC investigations on November 8, 2021, for violations of the 1933 Act and CEA, respectively, incurring civil monetary penalties totaling $2,500,000.
• The In re: United States Oil Fund, LP Securities Litigation, a consolidated class action filed June 19, 2020, alleging securities law violations, had a motion to dismiss granted without prejudice on September 29, 2025, with the plaintiff seeking to amend the complaint.
• The Wang Class Action, filed July 10, 2020, alleging 1933 Act violations, was voluntarily dismissed on August 4, 2020.
• The Mehan Action, a derivative action filed August 10, 2020, alleging breach of fiduciary duties, is stayed pending disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.
• The In re United States Oil Fund, LP Derivative Litigation, consolidated derivative actions filed August 27, 2020, alleging 1934 Act violations and common law claims, is stayed pending final disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.
• RBC Capital settled LIBOR class actions for $101 million (July 21, 2023), $3.45 million (2024), and $1.91 million (2024), but remains a defendant in individual LIBOR-related actions.
• RBC Capital's affiliate, RBC Bahamas, was convicted by a French Court of Appeal on March 5, 2024, for complicity in estate tax fraud, ordered to pay a fine and be jointly liable for unpaid taxes, with an appeal filed to the French Supreme Court.
• RBC Capital settled with the SEC in August 2024 for $45 million regarding non-compliance with records preservation requirements for business communications on personal devices, with a request to modify the settlement denied on April 15, 2025.
• RBC Capital settled a FINRA disciplinary action on April 29, 2024, agreeing to pay a $375,000 fine and $393,833.50 in restitution for inaccurate trade confirmations.
• RBC Capital and other defendants executed an agreement on October 31, 2024, to dismiss with prejudice a putative class action filed in June 2023 alleging anti-competitive conduct in the U.K. government bonds market, subject to court approval.
• RBC Capital settled with the SEC on April 24, 2020, for $2,607,676 disgorgement, $631,331 prejudgment interest, and a $650,000 civil penalty for failing to disclose conflicts of interest to retirement account customers.
• MCM received a favorable ruling on June 30, 2021, in a private litigation, with judgment entered in its favor for $1,762,266.57 plus interest and fees, and an additional $1,402,234.32 in attorneys' fees and costs on September 29, 2021.
• MCM settled a JAMS Arbitration on September 23, 2021, related to trading losses in futures accounts.
• In a FINRA Arbitration, the panel dismissed claimants' claims against MCM on June 22, 2023, and a petition to vacate the award was denied on April 22, 2024.
• MCM settled a private litigation in Cook County on September 29, 2023, regarding allegations of breach of contract and violation of the Illinois Wage Payment and Collections Act.
• An adversary complaint involving MCM and BlockFi was stayed on April 25, 2023, with BlockFi permitted to file an amended complaint.
• In a private litigation in the U.S. District Court for the Northern District of Illinois, a motion to dismiss was granted for six of eight counts on May 2, 2024, with the plaintiff not intending to amend the complaint; the matter remains pending with discovery ongoing.
• ADMIS was ordered to pay a $650,000 fine by a Commodity Exchange Business Conduct Committee Panel on January 28, 2020, for failing to require accurate reporting and supervise employees.
• The CFTC imposed a $500,000 civil monetary fine on ADMIS on September 29, 2022, for failure to supervise employees and agents.
• ADMIS was ordered to pay a $450,000 fine (allocated across companion cases) by Business Conduct Committees of the CBOT, Commodity Exchange, and CME on September 19, 2023, for failure to diligently supervise employees regarding account changes and trade transfers.

Related Party Transactions

• BNO has ongoing relationships with USCF and its affiliates.
• No direct financial transactions between BNO and the directors or officers of USCF have been disclosed beyond those detailed in the filing.
• Any related person transactions (as per SEC Regulation S-K item 404(a)) are subject to review and approval by the audit committee of USCF's Board.

Stakeholder Impact

• Shareholders face potential losses due to the decline in NAV and the underlying Brent crude oil market, as well as tax liabilities that may exceed distributions.
• Shareholders are exposed to risks related to market volatility, contango/backwardation, illiquidity, trading halts, and potential delisting.
• USCF management's time and attention may be diverted to compliance-related activities due to extensive regulatory reporting and ongoing litigation.
• Customers (indirectly, through BNO's market) could experience increased trading costs if Creation Basket offerings are limited or suspended.
• FCMs and other counterparties are subject to credit risk from BNO, although BNO mitigates this through transactions with highly-rated institutions and collateral requirements.
• FCMs themselves face significant legal and regulatory proceedings, which could impact their ability to serve BNO.

Next Steps

• USCF intends to continue to pursue BNO's investment objective of tracking the Benchmark Futures Contract.
• BNO will announce to the market via a Form 8-K filing if it intends to limit the offering of Creation Baskets.
• RBC Capital has sought longer-term relief from the Department of Labor regarding its Qualified Professional Asset Manager (QPAM) exemption.
• The adversary proceeding involving MCM and BlockFi remains stayed, with BlockFi permitted to file an amended adversary complaint.
• The Northern District of Illinois litigation involving MCM is pending, with parties currently exchanging in discovery.
• USCF, USO, and individual defendants intend to vigorously contest claims in the In re: United States Oil Fund, LP Securities Litigation and In re United States Oil Fund, LP Derivative Litigation.
• All proceedings in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in the In re: United States Oil Fund, LP Securities Litigation.

Key Dates

Recommendation

The fund experienced a net loss and a decline in NAV in 2025, driven by a challenging Brent crude oil market. While BNO demonstrated strong tracking performance relative to its benchmark and even outperformed it on a total return basis due to interest income, the underlying commodity market trends (oversupply, unwinding OPEC+ cuts) suggest continued headwinds. The extensive legal proceedings against USCF and its FCMs introduce additional uncertainty and potential financial impact. For a seasoned investor, the current environment warrants a "Hold" position, awaiting clearer signs of a sustained recovery in crude oil prices and resolution of legal and regulatory risks, while acknowledging the fund's effective management of its tracking objective.

Keywords

Brent crude oil, commodity pool, futures contracts, energy ETF, USCF, NYSE Arca, oil prices, financial reporting, risk management, SEC filing, 10-K, investment, trading, derivatives, contango, backwardation, commodity market