Rystad: Oil Prices Under Pressure, But Don’t Expect a Freefall

Oil prices took a hit this week, and according to Rystad Energy, the bearish mood is real—but temporary. Brent crude briefly dipped near $69 per barrel as markets reacted to OPEC+’s decision to gradually increase output starting in April, while ongoing tariff drama from Washington continues to rattle demand expectations.

Rystad’s Mukesh Sahdev, Global Head of Commodity Markets – Oil, notes that the market is fixated on oversupply fears, especially as time spreads narrow dangerously close to contango. Higher flows from Kazakhstan and Iraq are adding more barrels into an already well-supplied system, and traders are watching to see if OPEC+ will intervene to stabilize the market.

“…the anticipated supply losses from US President Trump’s sanctions and tariffs are yet to be considered serious given the administration’s flip-flopping,” Sahdev said in a note on Friday.

“On the contrary, the sentiment for demand-side weakness as a result of Trump’s tariffs is gaining ground. We project the drop in prices will be temporary and OPEC+ will take corrective measures as the crude time spreads fall below $0.50 per barrel and the market flirts with contango.”

The White House postponed its planned tariffs on Mexico, but Canadian retaliatory measures remain in place, and China is gearing up for its next move. The result? Investors are nervous that global demand could take a hit and pressure prices even further.

Still, Rystad Energy doesn’t see this as a lasting downturn. February marked the seasonal low point for global refinery demand, and between now and August, refinery runs are expected to rise by 3 million barrels per day. That uptick in crude consumption should help absorb some of the incoming supply and provide a price floor.

So yes, oil prices are feeling the squeeze from supply increases and policy uncertainty, but Rystad expects the bearish sentiment to be short-lived. If demand strengthens and OPEC+ adjusts accordingly, the market could find its footing soon enough. But for now, traders should prepare for more volatility before any real recovery takes hold.