Analysts from Citi predict a significant drop in Brent crude prices to $60 a barrel by year-end, banking on the U.S.-Iran truce to hold.
Citi analysts said that the memorandum of understanding (MOU) inked between the U.S. and Iran in mid-June will endure, despite potential “temporary flare-ups.” The analysts attribute this to the absence of incentives for either party to violate the agreement and the “genuine conflict fatigue” displayed by both nations, reported the Financial Times on Friday.
They further underscored the role of Lebanon, a possible disruption source, which is increasingly restricted by a broader U.S. preference for de-escalation. They advised traders to sell into oil price rallies over the summer and projected Brent prices to range between $60 and $65 a barrel by year-end.
The report also pointed out an increase in shipping volumes through the Strait of Hormuz to 7 million barrels a day of crude oil, compared with 15 million before the conflict. The analysts suggested that these volumes are likely higher than official data indicated due to many vessels disabling their transponders for security reasons.
At the time of writing, Brent crude oil price was trading 0.33% lower at $72.12 per barrel, while the WTI crude futures were trading 0.28% lower at $68.50 per barrel.
Lower Oil Price Forecasts Amid Hormuz Risk
This forecast follows a similar trend where other financial institutions have also revised their oil price predictions. Earlier, Morgan Stanley lowered its fourth-quarter Brent crude forecast to $75 per barrel from $80 and lowered its end-2027 target to $70 from $80, citing improving oil flows through the Strait of Hormuz as tanker traffic returned to pre-conflict levels.
Similarly, Goldman Sachs cut its oil price forecasts, now expecting Brent crude to average $80 per barrel in Q4 2026 and $75 in 2027, while cutting its WTI outlook to $75 and $70, respectively. The bank also expects Persian Gulf oil exports to return to pre-war levels by the end of July, a month earlier than previously forecast.
However, the situation remains complex as Iran’s Deputy Foreign Minister for Legal and International Affairs, Kazem Gharibabadi, declared the Strait of Hormuz under Tehran’s command, following a U.S. Central Command (CENTCOM) security summit in Bahrain. This development could potentially influence the flow of commerce through the Strait of Hormuz and impact future oil prices.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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