Citigroup Raises Brent Crude Forecast to $80 Amid Conflict

Citigroup has increased its forecast for Brent crude oil prices in the third quarter of 2023 to $80 per barrel from a previous estimate of $75. This adjustment is attributed to the ongoing conflict between the United States and Iran, which has disrupted oil supplies and hindered efforts to restore normal shipping through the Strait of Hormuz.

Despite the upward revision for the third quarter, Citigroup has a bearish medium-term outlook, maintaining its fourth-quarter Brent projection at $70 per barrel and forecasting an average price of $65 per barrel in 2027. As of the weekend, Brent crude was trading at $83.11 per barrel, while West Texas Intermediate (WTI) was at $77.80.

The forecast marks a significant change from Citigroup's earlier position in July, when it advised investors to sell into summer rallies, predicting Brent could drop to between $60 and $65 per barrel by year-end. The conflict has persisted for five months, with Middle Eastern oil output remaining below pre-war levels.