Citi Slashes Brent Forecasts on US-Iran Trade Deal Optimism

Citi has revised its Brent crude price forecasts downwards due to expectations that trade flows through the Strait of Hormuz will normalize after a Memorandum of Understanding (MoU) was signed between the US and Iran.

The bank cut its average Brent forecast for the third and fourth quarters of 2026 to $75 and $70 per barrel, respectively. It also lowered its 2027 Brent forecast to $65 per barrel from $80 previously.

Citi's new base case assumes the MoU will secure sustained flows through the Strait of Hormuz at largely normalized rates by mid-to-late July, which is assigned a 60% probability. The bank believes that market prices do not fully reflect an agreement to normalize trade flows over the medium term.

The analysts at Citi also raised their forecasts for gold and silver prices, citing broader risk sentiment improvement. They recommended buying aluminium despite a selloff following the US-Iran MoU news.