Banking giant Citi forecasts that oil prices could stay elevated in the short term due to international tensions, but potential peace agreements involving Russia and Iran could drive crude prices down later this year. The bank expects oil to fall to around $60-62 per barrel if diplomatic deals are reached by summer.
A major financial institution predicts that crude oil costs may experience short-term strength as President Donald Trump intensifies diplomatic efforts for peace agreements with Russia and Iran, though successful negotiations could eventually drive energy prices downward, according to a Citi analysis released Monday.
The price of Brent crude has jumped from approximately $60 per barrel to nearly $70 over the last month, driven in part by stricter implementation of American sanctions targeting Russian and Iranian petroleum exports, combined with additional supply interruptions, the financial firm reported.
In recent developments, the European Union put forward a proposal last week to expand its Russian sanctions framework to encompass ports in Georgia and Indonesia that process Russian crude, marking the first instance where the trading bloc would impose restrictions on third-country port facilities, based on proposal documentation examined by Reuters.
According to Citi’s assessment, the United States may influence energy affordability through diplomatic channels, specifically by facilitating peace negotiations between Russia and Ukraine and reducing tensions with Iran, which could help decrease both crude oil and refined product costs.
“It is our base case that both Iran and Russia-Ukraine deals happen by or during the summer of this year, contributing to a decline in prices to $60-62/bbl Brent and lowering diesel and gasoline cracks by $5-10 dollars,” the bank stated.
Should Russian supply disruptions maintain Brent crude within a $65-$70 per barrel price band over the coming months, Citi anticipates that OPEC+ will counter by boosting production from available capacity.
Sources within OPEC+ indicate the organization is considering resuming oil production increases starting in April, as the group prepares for peak summer consumption while price strength receives support from escalating U.S.-Iran tensions.
The banking institution also noted that China continues purchasing Russian and Iranian petroleum at reduced rates compared to international price benchmarks, both for immediate consumption and strategic reserves, with this pattern expected to persist through 2026 while sanctions on Russia, Ukraine, and Iran remain active.
Brent crude futures closed Monday’s trading session at $68.65 per barrel, representing a gain of 90 cents or 1.33%.
Source: https://srnnews.com/citi-says-geopolitics-to-support-oil-near-term-peace-deals-seen-lowering-prices/
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