Citi Ups Brent Forecast Amid Ongoing Iran Conflict

Citi has revised its Brent crude forecast upwards to $80 per barrel for the third quarter, citing the ongoing US-Iran conflict and repeated attempts at a deal to restore normal oil flows through the Strait of Hormuz.

The bank still expects the fourth-quarter Brent forecast to average $70 per barrel and sees the benchmark averaging $65 in 2027. However, this is not entirely new as Citi initially predicted Brent would fall to $60-$65 by year-end due to normalized Hormuz traffic and a broader agreement between Washington and Tehran.

Citi's latest revision follows concerns over US-Iran negotiations that helped lift prices after Brent briefly fell below $80 earlier in the week on renewed hopes for a Hormuz agreement. The bank is cautious, however, as shipping through Hormuz remains heavily constrained, Middle East oil production is still below pre-war levels, and attacks on commercial vessels have continued.

Goldman Sachs has offered a differing view, stating that Brent should remain between $80 and $90 until markets get confirmation of a US-Iran agreement or a significant escalation in attacks. The possibility of prices reaching as high as $120 per barrel exists if Hormuz remains closed for longer.