Iran’s continued restrictions on shipping through the Strait of Hormuz have forced Citi to raise its third-quarter Brent crude forecast to $80 per barrel, as prolonged disruptions to global oil flows keep geopolitical risks elevated.
Citi lifted its third-quarter Brent projection from $75 to $80 per barrel as the US-Iran conflict enters its fifth month without a durable agreement capable of restoring normal tanker traffic through Hormuz. The bank, however, retained its fourth-quarter forecast of $70 and continues to expect Brent to average $65 per barrel in 2027.
The revision marks a significant retreat from Citi’s earlier bearish outlook. In July, the bank had advised investors to sell summer rallies and projected Brent could fall towards $60-$65 by year-end, based largely on expectations that Hormuz traffic would normalise and Washington and Tehran would reach a broader agreement.
Those assumptions have yet to materialise. Shipping through the strategic waterway remains heavily constrained, while Middle East oil production remains below pre-war levels and attacks on commercial vessels continue to complicate the movement of crude and petroleum products.
The latest uncertainty centres on Iran’s position that the Strait of Hormuz will remain closed until the United States meets a series of demands. The development further weakens expectations of an immediate restoration of normal energy flows and raises questions over how quickly the global market can rebuild disrupted supply chains.
Goldman Sachs has taken a more cautious view than Citi on the outlook for the coming months, projecting Brent could remain between $80 and $90 per barrel until there is clearer evidence of a US-Iran agreement or a significant escalation in attacks. The bank has also warned that a prolonged closure of Hormuz could push prices as high as $120 per barrel.
The difference between the two forecasts highlights the uncertainty surrounding the oil market. Citi's $70 fourth-quarter projection depends heavily on the resumption of crude shipments through Hormuz, while the more bullish scenarios assume that restrictions persist long enough to create a deeper physical supply deficit.
Hormuz is particularly important because of its role in global energy trade. Any prolonged disruption to tanker movements through the waterway could constrain the availability of crude and refined products while forcing producers and traders to rely on alternative routes with more limited capacity and higher logistical costs.
For now, Citi remains convinced that the conflict will eventually be resolved and oil flows will recover, but its decision to raise the near-term Brent forecast shows how prolonged the disruption has become. The key risk is whether diplomatic efforts restore normal shipping before the accumulated loss of production, inventories and transport capacity translates into a more severe physical supply squeeze.