Oil prices could remain supported in the near term as U.S. President Donald Trump ramps up pressure for peace deals involving Russia and Iran, but a resolution later this year may ultimately push crude lower, Citi said on Monday.
Brent crude has rallied from around $60 per barrel to near $70 in the past month, partly reflecting tighter enforcement of U.S. sanctions on Russian and Iranian oil, alongside other supply disruptions, the bank said.
Last week, the European Union proposed extending its sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, the first time the bloc would target ports in third countries, according to a proposal document reviewed by Reuters.
Citi said that one channel through which the US may be able to influence affordability is via peace deals between Russia and Ukraine, and via de-escalation with Iran, which can contribute to lower crude oil and oil product.
“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,” Citi added.
If disruptions to Russian supply keep Brent in a $65–$70 per barrel range in coming months, Citi expects OPEC+ to respond by increasing output from spare capacity.
OPEC+ is leaning towards a resumption in oil output increases from April, three OPEC+ sources said, as the group prepares for peak summer demand and price strength is bolstered by tensions over U.S.-Iran relations.
Citi also said China has been buying Russian and Iranian oil at a discount to global benchmarks, for both purchasing and stockpiling purposes, and the bank expects this to continue in 2026 as long as Russia/Ukraine and Iran sanctions are in place.
Brent crude futures settled 90 cents, or 1.33%, higher at $68.65 a barrel on Monday.
(Reporting by Anushree Mukherjee in Bengaluru Editing by Nick Zieminski)