A pointed twitter message from US President Donald Trump sent oil futures tumbling on Monday. Brent crude shed 3.5%, its worst single-day drop this year. “OPEC, please relax and take it easy,” tweeted Trump, “World cannot take a price hike – Fragile!” The ensuing sell-off interrupted oil’s quiet rally – both main benchmarks are up more than 20% this year, as producer efforts to rebalance the market take hold.

While Trump’s tweet may have put oil markets on notice, we see several reasons prices are likely to continue rising in the months ahead:

* Once burnt, twice shy: The OPEC group boosted production last May as Trump vowed to send Iranian oil exports to “zero,” only to watch him extend buyer waivers in November, which contributed to a double-digit percentage price decline in oil futures. OPEC+ supply cuts hit 83% compliance in January against a targeted 1.2mbpd cut; at most, Trump’s comment may result in a slightly less aggressive stance toward curbs.

* Sanctions take their toll: Trump’s White House has expanded sanctions targeting Venezuela’s government, and the country’s oil output has nearly halved over the last two years to an estimated 1.17mbpd. US tensions with Iran show no signs of abating. A senior Iranian official on Saturday threatening to close the Strait of Hormuz shipping lane, and Iran’s Foreign Minister (the architect of the now defunct nuclear deal) offered his resignation from government.

* Oil demand still solid. The IEA expects oil demand to grow by 1.4mbpd this year, a number tempered by slower economic growth projections from key consumers like China. The most recent Chinese customs data challenged the slowdown narrative, with sharp rises in its imports of Russian (+25% y/y) and Saudi (+34% y/y) crude for January.So, the broader supply-demand balance looks set to tighten compared with the second half of last year. We forecast Brent prices to rise to USD 70–80/bbl over the next six months. Higher oil prices should support our preference for energy stocks in the Eurozone.