Citi raised its outlook for average Brent crude prices for the rest of 2026 late on Sunday, warning prices could surge to $150 a barrel if oil flows through the Strait of Hormuz remain disrupted through the end of June.
The bank lifted its base-case forecast for Brent to $110, $95 and $80 a barrel for the second, third and fourth quarter of 2026, respectively, assigning a 50% probability to that scenario.
Citi also pushed back its expected reopening of the Strait of Hormuz to the end of May, from mid-to-late April, after the United States and Iran failed to reach an agreement during their second round of peace talks.
“With both sides still far apart on their red lines, we see the risks surrounding our bullish near term and our 2H’26 central case oil price forecasts as skewed to the upside,” Citi said.
Under its bull-case scenario, which carries a 30% probability, Citi assumes oil flows remain disrupted through the end of June at levels similar to current outages.
In that case, Brent crude could spike to $150 a barrel, with average prices near $130 in both the second and third quarters of 2026, before easing to $100 in the fourth quarter.
The bank also outlined a “super bull” scenario in which the Strait of Hormuz remains closed beyond June, an outcome it said would have severe implications for oil spending as a share of global and U.S. economic output.
Citi noted oil prices have risen less than expected in recent weeks despite supply disruptions, citing large pre-conflict inventory builds, releases from International Energy Agency strategic stockpiles and a widespread expectations that the conflict would be resolved quickly.
Oil prices would need to rise far beyond current levels to match past peaks in oil spending relative to GDP, with U.S. all-in product prices near $280 a barrel and global prices around $220, implying Brent above $160-$180, Citi said.
Oil edged higher on Monday as U.S.-Iran peace talks stalled and shipments through the Strait of Hormuz remained constrained, keeping global supplies tight.
Brent crude futures rose to $106.68 a barrel by 0229 GMT, while U.S. West Texas Intermediate stood at $95.52.
(Reporting by Pablo Sinha and Noel John; Editing by Tom Hogue and Sumana Nandy)