Citi on Monday cut its average Brent crude forecasts to $75 and $70 per barrel for the third and fourth quarters of 2026, respectively, citing expectations that the Strait of Hormuz trade flows will resume and normalize after the U.S. and Iran approved a memorandum of understanding to end the war in the Gulf. The bank also lowered its 2027 Brent forecast to $65 per barrel from $80 previously, shifting its outlook toward what had been its bear-case scenario, it said in a note.
Citi said its new base case, assigned a 60% probability, assumes the MoU is signed and negotiations ultimately secure sustained flows through the Strait of Hormuz at largely normalized rates by mid-to-late July. U.S. President Donald Trump said on Monday that the memorandum had been signed by the United States and Iran.
“In our view, the market is pricing the MoU itself, but not an agreement that secures SoH flows over the medium term; otherwise, crude oil prices would likely be ~$10–15/bbl lower than they are today,” said analysts at the bank.
The brokerage added that limited U.S. appetite for renewed conflict and Iran’s willingness to engage support a strategy of selling summer oil rallies. In the same note, Citi raised its 0–3 month gold price forecast to $4,500 per ounce from $4,000, and its silver price forecast to $70 per ounce from $60, saying broader risk sentiment is likely to improve. The bank maintained a bullish 6–12 month gold view at $5,000 per ounce, while warning of significant volatility, while also recommending buying the dip in aluminium, despite a selloff following the U.S.-Iran MoU news. Brent crude futures were trading more than 4% lower at around $83.23 a barrel as of 1422 GMT, while spot gold was up 2.6% at around $4,327.34 an ounce.
(Reporting by Pranav Mathur in Bengaluru; Editing by Chizu Nomiyama )