Oil markets are under pressure as prices dipped this week, with Brent crude briefly touching $69 per barrel. The downturn comes amid OPEC+’s decision to increase production starting in April and growing concerns over global trade policies. However, leading energy consultancy Rystad Energy assures that while the bearish sentiment is real, it is unlikely to trigger a prolonged price collapse.
Oversupply Fears Grip Market, But Demand May Rebound
According to Mukesh Sahdev, Rystad Energy’s Global Head of Commodity Markets – Oil, market sentiment is being weighed down by oversupply fears. Increased crude flows from Kazakhstan and Iraq are contributing to an already saturated system, sparking concerns among traders about OPEC+’s ability to stabilize prices.
“The anticipated supply losses from U.S. sanctions and tariffs have not been taken seriously yet, given the administration’s unpredictable stance,” Sahdev noted in an exclusive statement.
“On the other hand, demand concerns stemming from trade disputes, particularly U.S. tariffs, are gaining traction. We believe the current price drop is temporary, and OPEC+ will step in with corrective measures if crude time spreads fall below $0.50 per barrel and the market moves toward contango.”
Global Trade Tensions Add to Market Jitters
The uncertainty surrounding trade policies is also fueling volatility. While the White House recently postponed tariffs on Mexico, Canada has maintained retaliatory measures, and China is expected to announce its next counteraction. This geopolitical turbulence has heightened concerns about weaker global demand, amplifying pressure on crude prices.
Despite these challenges, Rystad Energy does not anticipate a prolonged downturn. The consultancy points to seasonal refinery demand, which typically bottoms out in February and rebounds by mid-year. Between now and August, global refinery runs are projected to increase by 3 million barrels per day, providing a natural buffer against the current oversupply.
Market Outlook: Expect Short-Term Volatility, Not a Collapse
While oil prices are currently facing downward pressure due to supply growth and geopolitical uncertainty, Rystad maintains that the bearish sentiment will be short-lived. If demand strengthens and OPEC+ adjusts its strategy accordingly, prices could stabilize sooner than expected.
For now, traders should brace for continued market fluctuations before any sustainable recovery takes hold. But a price freefall? Not likely, according to Rystad’s latest assessment.