Citigroup raises third-quarter Brent forecast to $80

en.Wedoany.com Reported - Citigroup has raised its third-quarter Brent crude forecast to $80 per barrel from $75, citing the ongoing US-Iran war, where multiple efforts to reach a deal have failed to restore normal oil flows through the Strait of Hormuz.

The bank still expects the conflict to be resolved, but the five-month-long war has lasted longer than Citi anticipated and has added more geopolitical risk to crude prices. Citi maintained its fourth-quarter Brent forecast of $70 per barrel and still expects the benchmark to average $65 in 2027.

On Friday afternoon, Brent crude futures were trading at $83.11 per barrel, up $0.62, while West Texas Intermediate (WTI) rose $0.51 to $77.80. Earlier this week, Brent dipped below $80 on renewed hopes for a Strait of Hormuz deal, before concerns over US-Iran negotiations lifted prices.

Citi's latest revision marks another step back from the bank's aggressively bearish stance earlier this summer. In early July, Citi advised selling the summer rally and predicted Brent would fall to between $60 and $65 per barrel by year-end as Hormuz traffic normalized and Washington and Tehran moved toward a broader agreement. Neither assumption has held up well over time.

Shipping through the Strait of Hormuz remains severely restricted, and Middle East oil production remains well below pre-war levels, with attacks on commercial vessels continuing even as negotiators discuss possible arrangements for the waterway.

Citi's December outlook had projected Brent to average just $62 in 2026, with a bearish scenario of $50 and a bullish scenario of $75 if geopolitical disruptions truly materialized. Those disruptions did occur. With the war removing millions of barrels per day from the market, Brent has traded well above those levels for most of the second quarter.

Goldman Sachs is less convinced that oil prices are ready for the fourth-quarter decline Citi expects. The bank said earlier this week that Brent should remain between $80 and $90 per barrel until the market gets confirmation of a US-Iran deal or a significant escalation in attacks; if the Strait of Hormuz is closed for longer, prices could reach $120 per barrel.

Citi's fourth-quarter forecast of $70 per barrel now relies heavily on the same point as its July projection: more crude flowing through the Strait of Hormuz.