Key insights
- Citi forecasts Brent crude to $120/bbl near-term, citing under-priced supply disruption risks. Bull-case scenario sees $150/bbl if the Strait of Hormuz re-opens in Q3. While oil prices dipped on US-Iran talks, potential for higher energy costs could fuel inflation, posing a moderate bullish risk to energy stocks but a bearish risk to overall US equities due to inflationary pressures.
Investing.com -- Citi said Tuesday it expects Brent crude to rise to $120 a barrel in the near term, stating that oil markets are under-pricing the risk of a prolonged supply disruption and broader tail risks.
The bank said its bull-case scenario is for Brent prices to reach $150 per barrel, assuming the Strait of Hormuz will gradually re-open during the third quarter.
Oil prices settled lower Tuesday after Vice President JD Vance said the U.S. and Iran had made progress in talks, with neither side wanting to see a resumption of military action.
Brent futures for July settled down at $111.28 a barrel Tuesday.
Citi said its 2027 outlook for oil prices is difficult to predict, but its central case sees Brent prices ranging from $80 per barrel to $90 per barrel, assuming Iran maintains control of the Strait of Hormuz flows and balances oil exports with demand growth expectations.
Citi forecasts 2026 oil demand growth to contract by 0.6 million barrels per day. The bank said apparent demand weakness likely overstates real consumption declines as inventory drawdowns and refinery cuts mask relatively limited end-use demand destruction.
The bank estimates global oil inventories will draw by about 1 billion barrels this year.
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