The major players are betting on further declines in oil. Why

Oil prices have largely avoided the turmoil that shook stocks and currencies this week, but Brent typically doesn’t stay put during periods of uncertainty. The overall bearish market sentiment suggests that the next move will be downward. The risks at the moment are tilted towards a downward movement. Brent has dropped 12% from its January peak, WTI is 15% lower, and some of the largest oil traders in the world are turning towards the bearish trend. The reasons are clear:

• Supply is increasing: OPEC+ production is rising, Russian barrels continue to flow, and U.S. production is not slowing significantly.
• Demand is uncertain: The global economy is sending warning signals, and the current tariff regime risks slowing growth. The International Energy Agency (IEA) has just cut its demand growth forecast.
• Traders are lowering their target prices: Vitol and Gunvor now expect oil to stay within a lower range of $60 to $80 per barrel.

Despite these factors, oil is currently holding around $70 per barrel, a level that is trying to establish itself as a floor. There are reasons for this – market structures remain tight, price retests haven’t collapsed, and any action from the White House against sanctioned barrels from Iran or Venezuela could change the situation.

Whether the next move will be towards $80 or drop below $60 depends on China’s appetite for energy and the direction of Federal Reserve policy. A sharp increase in demand from Beijing’s refineries or a softer stance from the Fed could push oil prices up, while prolonged economic uncertainty or a hawkish turn in interest rates could push prices down. Given the current bearish market sentiment, the likelihood of further weakening is higher.