Citi said on Wednesday that oil prices may stay elevated due to rising geopolitical risks, U.S. restrictions on Russian oil purchases and continued Chinese buying, even as markets entered the year expecting a large oversupply.
“Further geopolitical escalation can lift prices to our 0-3m target of $70 a barrel,” the bank said in a note.
Citi noted that Kazakhstan production outages, severe cold weather in the U.S., geopolitical tensions in the Middle East and tightening U.S. restrictions on Russian oil purchases helped keep prices above $60 a barrel.
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Oil prices rose to their highest since late September on Wednesday on looming Iran concerns while a weak U.S. dollar lent further support.
U.S. President Donald Trump urged Iran on Wednesday to come to the table and make a deal on nuclear weapons or the next U.S. attack would be far worse. Tehran responded with a threat to strike back against the United States, Israel and those who support them.
Citi said that potential for Iran getting attacked has escalated the geopolitical premium of oil prices by potentially $3 to $4 a barrel, adding that any further ratcheting up of tensions would lift the premium higher.29dk2902l
“Our bullish price case of $72/bbl and our 0-3m price target of $70/bbl both reflect such a scenario, if realized,” Citi said.
Citi also said Chinese buying may help explain oil’s unexpected price strength, noting continued inventory-driven imports.
Citi estimated apparent crude stock builds averaged around 0.7 million barrels per day in 2025.
OPEC+ is expected to keep its pause on oil output increases for March at a meeting on Sunday, three OPEC+ delegates told Reuters, with prices rising due to a drop in Kazakhstan’s oil production.
Citi highlighted that even if OPEC+ resumes production increases from April, tighter restrictions on purchases of Russian oil, including by India, could essentially reduce the amount of oil supply that would offset any returns.
(Reporting by Ashitha Shivaprasad and Anushree Mukherjee in Bengaluru; Editing by Jamie Freed)
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