Citi slashes Brent crude forecasts after U.S.-Iran deal

Citigroup ↘0.50% on Monday sharply lowered its Brent crude forecasts, projecting $75 for Q3 and $70 for Q4, down from $110 and $90, according to Yahoo Finance.yahoo
The revision follows Sunday’s U.S.-Iran framework agreement to end their four-month conflict and reopen the Strait of Hormuz, which carries roughly 20% of global maritime oil.apnews
Oil prices fell sharply Monday, with Brent dropping below $83 per barrel, though analysts warn mine clearance and a formal signing Friday could delay supply recovery.wsj

Citi Cuts Brent Forecasts as US-Iran Deal Points to Hormuz Normalization

Citigroup on Monday slashed its Brent crude price forecasts, citing expectations that the US-Iran memorandum of understanding will lead to a gradual restoration of oil flows through the Strait of Hormuz, according to a research note reported by Yahoo Finance. The bank now projects average Brent prices of $75 per barrel for the third quarter of 2026 and $70 per barrel for the fourth quarter, a steep reduction from its prior forecasts of $110 and $90 for those periods, respectively.yahoo

The revision follows Sunday’s announcement that the United States and Iran have reached a framework agreement to end their four-month conflict and reopen the strait, which handles roughly 20% of global maritime oil trade. President Donald Trump declared on Truth Social that “the Deal with the Islamic Republic of Iran is now complete,” adding, “Let the oil flow!”apnews

Oil Markets React

Brent crude fell more than 5% on Monday, trading below $83 per barrel — its lowest level since early March when the US-Israeli military campaign against Iran began. West Texas Intermediate dropped roughly 6%, briefly dipping below $80. The sell-off accelerated a decline that had already brought prices down nearly 13% from levels earlier in the week as deal expectations built.wsj

Citi’s forecast shift is dramatic. As recently as May, the bank warned Brent could hit $120 near-term and even $150 under a bull case if Hormuz disruptions persisted. In April, Citi had raised its base-case outlook to $110 for Q2, $95 for Q3, and $80 for Q4. Monday’s downgrade reflects the rapid unwinding of the geopolitical risk premium that had sustained elevated prices throughout the conflict.energynow

Uncertainties Remain

Analysts cautioned that physical supply recovery will not be immediate. Andrew Lipow of Lipow Oil Associates told the BBC that clearing mines from the waterway could take “a few weeks to six months,” and restoring stable shipping flows might require 30 to 45 days. Iran’s deputy foreign minister Kazem Gharibabadi confirmed the agreement on state television but said Tehran would not implement it until the formal signing ceremony, scheduled for Friday, June 19, in Geneva.usatoday

The deal initiates a 60-day negotiation window to address unresolved issues including Iran’s nuclear program and sanctions relief. Crude prices remain roughly $10 above pre-conflict levels in the low $60s, suggesting markets still price in execution risk even as the geopolitical premium fades.apnews