Citi has raised its short-term outlook for Brent crude, saying prices could reach $70 per barrel over the next three months as geopolitical risks intensify.
In a research note, the bank increased its 0–3 month Brent forecast to $70 per barrel from $65, citing rising upside pressure from potential supply disruptions.
Brent climbed about 1% to above $66 per barrel early Wednesday, as markets began to price in the risk of a possible U.S. strike on Iran and broader instability across the Middle East.
“We now think this oil rally has room to extend above our $55–65/bbl forecast range in the coming days,” Citi analysts wrote in a note reported by Investing.com.
Rising Risk in Iran and Russia
Citi said supply risks have increased in both Iran and Russia, but it stressed that current market conditions differ from earlier geopolitical shocks.
“Unlike the U.S. strikes on Iran in June 2025, oil balances are now much looser in an oversupplied market,” the bank noted.
The analysts said any price spike would likely fade quickly. Higher prices, they argued, would encourage producers to hedge output, while OPEC+ still holds spare capacity to raise supply from the second quarter of 2026 if major disruptions emerge.
“President Trump wants lower oil prices, and OPEC+ can still increase supply if sizeable disruptions occur,” the note said.
Physical Supply Faces Limited Threat
Citi also downplayed the risk of immediate production losses in Iran, despite ongoing unrest.
The bank said the main protests—and their violent suppression—remain far from key oil-producing regions, including Khuzestan, which accounts for roughly 2.5 to 3.0 million barrels per day of Iran’s production capacity.
This distance, Citi said, reduces the risk of near-term physical supply disruption.
“As a result, current risks lean more toward political and logistical frictions than direct outages, keeping the impact on Iranian crude supply and exports contained,” the analysts wrote.
Bank Expects Any Rally to Fade
Even if Brent climbs above $70 per barrel, Citi does not expect the move to last.
The bank described any rally beyond that level as temporary and advised investors to sell into strength. It said global oil balances will loosen further through the first half of the year.
