With crude futures trading below $30 per barrel, analyst John Kilduff said Friday that prices will spiral even lower before they bounce.
The most bearish outlooks now see oil bottoming around $10 per barrel. While those estimates sound crazy, the long-awaited recovery will not come until the market finds a price that will finally persuade drillers to turn off the tap, Again Capital's founder said.
"The market is going to have to get to a shock price point that's going to bring producers … really to their knees and to finally react," he told CNBC's "Squawk Box."
High-cost production has thus far weathered a Saudi-led OPEC policy of maintaining output in order to maintain market share and pressure non-OPEC members.
U.S. drillers have proved more resilient at lower prices than previously thought, while exporting nations dependent on oil revenue, such as Russia, have refused to draw down production.
But Kilduff noted that Russian officials have begun to entertain the notion of doing just that. On Wednesday, Russian Deputy Finance Minister Maxim Oreshkin told Russian news agency Tass that current prices may result in "quite hard and fast closures" of some producers in the coming months.
However, the bad news just keeps on coming for the oil markets, Kilduff said.
Overnight, Reuters reported that Iran's crude oil exports are on target to hit a nine-month high in January as buyers prepare for the lifting of sanctions against the Middle Eastern country within days.
Iran is on track to ship 1.10 million barrels per day of crude excluding condensate this month, according to an industry source with knowledge of the OPEC member's tanker loading schedule.
The market is already oversupplied by 500,000 to 2 million barrels per day, according to various estimates.
On the demand side, Kilduff pointed to separate data that showed China's new bank loans slowed in December, raising questions over the quality of borrowing in the face of weak demand and deflationary pressure.
Ultimately, OPEC needs to come together and cut back supply to get prices up in order to sell less oil at higher numbers and bring in more revenue, Kilduff said.
Some members have advocated for production cuts, but those calls have so far been resisted by top exporter Saudi Arabia, which has some of the lowest production costs, hundreds of billions in reserve assets, and ample ability to borrow.
"I don't know when that's going to dawn on them, but it's going to be lower from here. It seems pretty clear," Kilduff said.
Matt Smith, director of commodity research at ClipperData, said Friday oil prices can fall farther as the market remains trapped in a vicious circle, in which economic concerns exert pressure on crude, which in turn eggs on economic concerns.
Diverging central bank policy around the world will also have implications for crude, as easy money abroad drives down international currencies, making dollar-denominated oil more expensive around much of the globe, Smith told "Squawk Box."
He noted that the weaker dollar propelled crude prices higher between 2009 and 2012, followed by a period of peaking crude costs through mid-2014, which dovetailed with the lows for the U.S. dollar.
With the U.S. outperforming relatively week economies abroad, dollar strength looks set to persist, he said.
"From that perspective, if you think the dollar is going to strengthen going forward, you've really got to expect headwinds for the crude market," Smith said..
— Reuters contributed to this story.