Analysts at Citigroup predict that crude prices could drop to around $60 per barrel if diplomatic agreements with Iran and Russia progress in the coming months.
In a research note cited by Reuters, the bank outlined its base case: Russia and Ukraine reach a peace deal, and the United States finalises a renewed nuclear agreement with Iran by or during the summer. If that happens, Brent crude could fall to between $60 and $62 per barrel. Diesel and gasoline refining margins, known as cracks, could also shrink by $5 to $10 per barrel.
Short-Term Support from Geopolitical Risks
Citi expects geopolitical tensions to keep supporting oil prices in the near term. Stricter enforcement of sanctions on Russia or potential U.S. military action involving Iran could disrupt supply and push benchmark prices higher.
In the latest trading session, Brent crude traded at $68.23 per barrel, while West Texas Intermediate stood at $63.39 per barrel. Traders continue to track developments around renewed nuclear negotiations between Washington and Tehran.
Tensions Surround Nuclear Talks
Recent military activity has added to market uncertainty. Iran conducted drills in the Strait of Hormuz, a key global oil transit route, as the United States deployed a second aircraft carrier into the Persian Gulf.
Tehran has made it clear that it will limit discussions to its nuclear programme. Iranian officials rejected U.S. efforts to broaden the agenda to include ballistic missile issues.
U.S. Secretary of State Marco Rubio said diplomacy still offers a path forward, though he acknowledged the difficulty of reaching a comprehensive agreement.
At the same time, Iran’s Foreign Minister Abbas Araqchi said he expects negotiators to secure a fair and balanced outcome. He also stressed that Iran will not negotiate under threats.
Market Outlook
Citi’s outlook suggests that successful diplomatic breakthroughs could ease supply concerns and pull crude prices lower later this year. Until negotiators reach firm agreements, however, geopolitical risks will likely keep oil markets volatile and highly sensitive to new developments.