Citi Downgrades Brent Crude Forecasts Amid Strait of Hormuz Normalization

Citi has lowered its Brent crude forecasts due to expectations that trade flows through the Strait of Hormuz will normalize after the US and Iran approved a memorandum of understanding.

The bank cut its average Brent forecast for the third quarter of 2026 to $75 per barrel, down from an earlier estimate of $85. For the fourth quarter of 2026, Citi now predicts Brent crude prices at $70 per barrel, down from $80 previously.

Citi's new base case assumes that the MoU will secure sustained flows through the Strait of Hormuz by mid-to-late July, with a 60% probability assigned to this outcome. Analysts at Citi believe that the market is pricing in the MoU itself, but not an agreement that ensures long-term trade flows.

In a related note, Citi raised its gold price forecast to $4,500 per ounce for the next three months and its silver price forecast to $70 per ounce. The bank's analysts also recommended buying aluminium on dips due to improving risk sentiment.