This is a direct confirmation of the price path our own coverage has been pointing toward, with Citi effectively conceding its earlier timeline for a Hormuz resolution was too optimistic rather than abandoning the resolution thesis altogether. The 5 dollar upward revision to the Q3 number is modest relative to the scale of disruption we have been reporting, including the recent tanker strike in the US-backed southern corridor, which suggests Citi still sees the current elevated flows through the strait’s southern lane as broadly sustainable rather than at serious risk of a full shutdown. The more revealing detail is that the unchanged 70 dollar Q4 forecast now rests on the same assumption that underpinned the bank’s July call, more barrels getting through Hormuz, an assumption that looks shakier given the missile strike and Iran’s continued insistence the strait remains a theatre of war until its conditions are met. If a Hormuz deal keeps slipping into Q4, Citi’s 70 dollar number looks like the more vulnerable of its forecasts, and a further upward revision there would be the next signal to watch for confirmation that the market is pricing in a longer standoff rather than a near term resolution.
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Citi is finally admitting the Hormuz standoff has outlasted its own timeline, even as it keeps betting the war eventually resolves itself.
Summary:
- Citi raised its Q3 Brent crude forecast to 80 dollars a barrel from 75, citing the drawn out US-Iran war and repeated failed attempts to restore Hormuz flows
- The bank left its Q4 Brent forecast unchanged at 70 dollars and its 2027 average unchanged at 65 dollars
- Citi still expects the conflict to eventually be resolved, but said the five month war has lasted longer than it had anticipated
- Citi’s unchanged 70 dollar Q4 forecast now depends on the same assumption underpinning its July call, more barrels getting through Hormuz
- The revision comes amid continued tanker strikes and Iran’s insistence the strait stays closed until its conditions are met in full
Citi has raised its third quarter Brent crude forecast to 80 dollars a barrel from 75, according to Reuters, as the US-Iran war drags on and repeated attempts at a deal have failed to restore normal oil flows through the Strait of Hormuz. The bank still expects the conflict to eventually be resolved, but said the five month war has lasted longer than it had anticipated, keeping more geopolitical risk priced into crude than its earlier forecasts assumed.
Citi left its fourth quarter Brent forecast unchanged at 70 dollars a barrel and continues to see the benchmark averaging 65 dollars in 2027. Analysts at the bank said the delay in reaching a resolution warranted a higher near term price assumption even as their longer term view of the conflict’s eventual outcome remains unchanged. Citi’s unchanged 70 dollar fourth quarter forecast now depends on largely the same assumption that underpinned its July call, that more barrels will manage to get through Hormuz as the situation progresses.
The revision comes against a backdrop of escalating tension in the strait, including missile strikes on tankers and Iran’s continued insistence that the waterway will remain closed until its list of conditions, covering sanctions relief, war compensation and a US withdrawal from the region, are met in full. Citi’s relatively modest 5 dollar upward revision suggests the bank still views the bulk of current flows through Hormuz’s southern corridor as broadly sustainable, rather than seeing the conflict as being on the verge of a fuller disruption to global supply.
The forecast update leaves Citi’s overall view intact, that oil prices should gradually normalize as the conflict is resolved and Hormuz traffic returns to something closer to pre war levels, even as the timeline for that outcome continues to be pushed further out than the bank originally expected.
This article was written by Eamonn Sheridan at investinglive.com.