Citi Turns Bearish on Oil, Sees Brent Falling to $60
Synopsis
The forecast adds to growing expectations that improving supply conditions and easing geopolitical tensions will weigh on global crude prices.
Citi has become somewhat conservative about the oil market, predicting that Brent crude may fall to US$60 per barrel at the end of 2026, with improved supply dynamics prevailing over the geopolitical risk factors which had previously supported the upward momentum of prices.
According to the bank, the market is now shifting its focus from geopolitical risks and back to production volumes, inventories, and demand dynamics.
According to the latest Citi commodity outlook report, Brent crude is forecasted to average around US$62 per barrel in the second half of 2026.
This forecast comes following the pullback in the geopolitical premium due to the recovery of ship passages through the Strait of Hormuz and the alleviation of fears of disruptions to supplies.
Supply Outlook Replaces Geopolitical Premium
Hormuz Strait continues to be among the most vital energy thoroughfares of the world, as it ships about 20% of the total oil consumed globally and a good portion of the exported liquefied natural gas, according to the U.S. Energy Information Administration (EIA).
Despite Middle Eastern tension pushing up the price of crude oil, ship movement through this energy corridor is back to normal in the last couple of weeks, thus eliminating any immediate worry about the global supply.
Citi believes increased output from OPEC+ and growth in oil supplies from other producing countries will ease market conditions. This report forecasts that global liquid fuel inventories will rise to 10.9 billion barrels by the end of 2026, accounting for roughly 103 days' forward demand coverage, with stocks rising by approximately 2.1 million barrels per day in 2026.
Asian Buyers Remain Most Exposed
This projection will be especially important for Asia, where economies such as China, India, Japan, and South Korea rely extensively on their crude oil deliveries going through the Strait of Hormuz.
While Australia is less dependent on its Gulf crude deliveries than most of the countries in Asia, the changes in international benchmark prices still affect domestic fuel prices since refined fuel prices are highly correlated with international crude prices.
In the case of the United States, while the effects might be somewhat indirect, higher crude oil supplies combined with low benchmark prices might contribute to reducing fuel prices despite the fact that the US has become one of the biggest producers of crude oil.
Downside Risks Outweigh Upside
It gives a 30 percent chance for Brent to drop below $60 per barrel, possibly even dropping to $50 if there are any additional weaknesses in global demand or if supply growth surprises on the upside.
In contrast, there is only a 10 percent chance that the oil will move above $75 per barrel, which would come from either new geopolitical threats or new export restrictions on oil worldwide.
The Brent Crude Oil prices were hovering around $72 per barrel as they fell off their highs. According to Citi, the trend in price will be less driven by geopolitical happenings in the coming months and will be more based on supply growth, inventories, and consumption trends.
Source: Bloomberg
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Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
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