Citigroup has raised its third-quarter Brent crude oil price forecast to $80 per barrel, up from a prior estimate of $75, citing sustained geopolitical risk stemming from an ongoing U.S.-Iran conflict that has disrupted global oil flows. According to the bank's analysis, repeated diplomatic failures to broker a resolution have extended the conflict well beyond initial expectations, keeping premium valuations in place for crude across key trading hubs. The five-month conflict has maintained pressure on the Strait of Hormuz, a critical chokepoint for global oil supply.
The bank maintained its fourth-quarter Brent projection at $70 per barrel, signaling confidence in eventual conflict resolution that would ease supply concerns. Despite near-term upward revisions, Citi's medium-term outlook remains cautious, projecting Brent to average $65 per barrel throughout 2027 as geopolitical tensions ease and market fundamentals normalize. Brent futures were trading around $83 per barrel at the time of the forecast revision.
Citigroup's updated view reflects the tension between immediate supply-side shocks and longer-term demand normalization. While elevated oil prices provide near-term support, the bank's projection for 2027 suggests confidence that supply chains will stabilize and prices will find equilibrium once regional tensions subside, potentially driven by shifts in global energy dynamics and renewed production capacity.