Oil prices have yet to show significant movement following US President Donald Trump’s win, says Mukesh Sahdev, Rystad Energy’s global head of commodity markets for oil.
“Brent has entered a correction phase, ending several weeks of gains after surpassing the US$75-per-barrel mark, pre-victory. This correction reflects expectations of increased US supply and a potential demand slowdown tied to a tariff-driven approach toward key trading partners, particularly China,” says Sahdev in a Nov 7 note.
As the market navigates shifting political and geopolitical hurdles, oil prices remain under pressure from ongoing supply chain disruptions and a sluggish macroeconomic recovery, says Sahdev.
“Adding to the complexity, the strengthening dollar — boosted by Trump’s return to office — leaves oil market participants grappling with election-related uncertainties that can only be answered in the coming months,” he adds.
The US political system is at a tipping point, according to independent research and business intelligence firm Rystad Energy. Trump’s second term is poised to either bring substantial shifts in US policy or reinforce continuity — both alternatives carrying far-reaching implications for global oil markets in 2025.
Regardless of geopolitical uncertainties and the recent election outcome, persistent trends in oil markets are likely to shape the outlook ahead. Rystad Energy analyses three key trends defining the structural shifts in oil fundamentals.
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OPEC+ still pulls the strings
OPEC+ is likely to continue adjusting market management by directly influencing crude supply and indirectly managing product supply, according to Rystad Energy.
The downstream sector in the Middle East is growing, with considerable refining capacity added in recent years, adds the firm.
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OPEC countries can be broadly divided into two groups: those consistently under-compliance in crude production cuts; and those showing higher compliance on the crude side while exporting large volumes of refined products.
In other words, in equivalent crude terms, more oil is reaching the market than required.
This balance between crude and product flows has helped keep prices from reaching extreme highs or lows, aligning with OPEC's goal of maintaining price stability.
“OPEC+’s main strategy seems to be keeping the crude market in a backwardation structure, where prompt prices are higher than futures,” says Rystad Energy. “This market structure allows OPEC+ to manage financial market dynamics and limit producer hedging, giving the group more control over market direction.”
Rystad Energy thinks OPEC+ is likely to continue this approach, ensuring that prompt crude prices stay above futures. “The policy of signalling that more crude will come onto the market further down the curve helps maintain pressure on the back end, supporting the backwardation structure.”
OPEC+ is not overly concerned about non-OPEC growth, as US shale production has slowed and growth is now lower than historical levels. “Additionally, the quality of US shale oil is becoming lighter, which presents challenges for refineries in both the US and Europe, particularly as the petrochemical market faces weaker demand. Canada’s crude reaching Asian markets could further limit the US refining advantage,” according to Rystad Energy.
Brazil is also increasing its oil production, but it is not yet participating in OPEC+ production cuts and no indications have been given that it will. “However, in the event of a significant market downturn, it is possible that Saudi-led OPEC+ could ask Brazil to join the cuts, as Brazil is a member of the BRICS group,” reads Rystad Energy’s note.
Refinery margins battle weaker demand and higher supply
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Refinery margins surged to very high levels following the Ukraine crisis, providing refineries with a strong incentive to stay operational and slowing the rate of attrition.
Middle Eastern refineries, in particular, have been the biggest beneficiaries of increased European product demand, as European refineries lost access to cheaper Russian crude and gas.
However, the strong product exports from the Middle East and Asia to Europe have put downward pressure on refinery margins, driving them back to low levels, near pre-pandemic levels, according to Rystad Energy. This has contributed to further refinery closures across the US, Europe and China.
This could be a critical tipping point for OPEC+, which is likely to continue keeping refinery margins under pressure throughout 2025, driving further consolidation in the refining sector.
As demand recovers — possibly boosted by Chinese stimulus measures and broader economic normalisation — OPEC+ and China are positioned to capture a larger share of the product markets, according to Rystad Energy’s forecasts.
By 2025, the management of product markets could become just as important as the management of crude markets, says Rystad Energy. “The idea of OPEC effectively managing the ‘products’ market is not out of the question.”
Oil trade flows continue to battle inefficiencies
Finally, trade flows are likely to stay impacted, with “inefficiencies” hampering an easier balancing of supply and demand tensions, says Rystad Energy.
Geopolitical conflicts have “significantly altered” trade flow volumes and routes towards higher costs and ineffective balancing of stress in supply and demand balances, adds the firm. “Longer routes in a backwardated market with high interest rates has further eroded market balancing across regions.”
The big shifts through the year have been the routing of Russian crude and product flows towards Asia, routing of crude and products via the southern tip of Africa due to disturbances in the Red Sea, altered flows through the Strait of Hormuz and longer flows from Russian products heading to South American countries.
According to Rystad Energy, these changes are unlikely to resolve easily as the duration of disruptions has been lengthy and supply chains have become entrenched with new market players in the trading segment.
