Citi has raised its third-quarter Brent crude forecast to $80 per barrel from $75 as the U.S.-Iran war drags on and repeated attempts at a deal fail to restore normal oil flows through the Strait of Hormuz.
The bank still expects the conflict to be resolved, but the five-month war has lasted longer than Citi anticipated and kept more geopolitical risk in crude prices. Citi left its fourth-quarter Brent forecast unchanged at $70 per barrel and still sees the benchmark averaging $65 in 2027.
Brent futures were trading at $83.11 per barrel on Friday afternoon, up $0.62, while West Texas Intermediate gained $0.51 to $77.80. Concerns over U.S.-Iran negotiations helped lift prices after Brent briefly fell below $80 earlier in the week on renewed hopes for a Hormuz agreement.
Citi’s latest revision is another retreat from the bank’s aggressively bearish call earlier this summer. In early July, Citi recommended selling summer rallies and predicted Brent would fall to $60-$65 by year-end as Hormuz traffic normalized and Washington and Tehran moved toward a broader agreement.
Neither assumption has aged particularly well.
Shipping through Hormuz remains heavily constrained, Middle East oil production is still well below pre-war levels, and attacks on commercial vessels have continued even as negotiators discuss possible arrangements for the waterway.
Citi’s December outlook had Brent averaging just $62 for all of 2026, with a bearish scenario of $50 and a bullish case of $75 if geopolitical disruptions actually materialized. They did. Brent spent much of the second quarter well above those levels after the war removed millions of barrels per day from the market.
Goldman Sachs is less convinced that prices are ready for Citi’s expected fourth-quarter drop. The bank said earlier this week that Brent should remain between $80 and $90 until markets get either confirmation of a U.S.-Iran agreement or a significant escalation in attacks, with the possibility of as much as $120 per barrel should Hormuz remain closed for longer.
Citi’s $70 fourth-quarter forecast now depends heavily on the same thing its July call did: more barrels getting through Hormuz.
By Julianne Geiger for Oilprice.com
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