Why did Citi cut its Brent crude forecasts for 2026 and 2027, and what key assumption underpins its new base case?

Citi cut its average Brent crude forecasts to $75 and $70 per barrel for Q3 and Q4 2026, respectively, and lowered its 2027 forecast to $65 per barrel from $80, shifting toward its former bear-case scenario. The bank attributes these downward revisions to expectations that trade flows through the Strait of Hormuz will resume and normalize following the U.S.-Iran memorandum of understanding (MoU) to end the war in the Gulf. Its new base case — assigned a 60% probability — assumes the MoU is signed and negotiations ultimately secure sustained, largely normalized flows through the Strait of Hormuz by mid-to-late July.

What does Citi say about current oil market pricing relative to the MoU’s implications for Strait of Hormuz flows?

Citi states that '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.' This indicates the bank believes the current oil price level does not yet reflect confidence in durable normalization of Strait of Hormuz transit — a key driver of its revised bearish outlook.

Citi Cuts Brent Forecasts as U.S.-Iran MoU Points to Strait of Hormuz Flow Normalization

Jun 15, 2026

Citi reduced Brent crude forecasts to $75–$65 per barrel for 2026–2027, anticipating normalized Strait of Hormuz flows following a U.S.-Iran agreement. The bank also raised short-term gold and silver forecasts while recommending aluminium purchases.

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Citi Cuts Brent Forecasts as U.S.-Iran MoU Points to Strait of Hormuz Flow Normalization

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