Citi has sharply revised down its Brent crude price forecasts after the United States and Iran signed a memorandum of understanding aimed at ending the conflict in the Gulf, with the bank now expecting Strait of Hormuz trade flows to resume and normalize in the weeks ahead.
New quarterly targets place average Brent at $75 per barrel in the third quarter and $70 per barrel in the fourth quarter of 2026. The bank’s 2027 outlook dropped to $65 per barrel from a prior estimate of $80, a move that effectively elevates what had been Citi’s bear-case scenario into its new base case.
Citi assigned a 60% probability to that base case, which assumes the MoU is formally signed and that negotiations successfully secure sustained Hormuz flows at largely normalized rates by mid-to-late July. U.S. President Donald Trump confirmed on Monday that the memorandum had been signed by both sides.
Despite the MoU news sending Brent futures more than 4% lower to around $83.23 a barrel, Citi’s analysts believe the market has not yet fully priced in what a durable shipping normalization would actually mean for oil. According to the bank, crude prices would likely sit $10 to $15 per barrel below current levels if markets were truly reflecting a medium-term resolution of Hormuz flows.
That gap between current pricing and a fully priced-in resolution is central to Citi’s trade recommendation. The bank flagged limited U.S. appetite for renewed conflict and Iran’s willingness to engage as factors supporting a strategy of selling summer oil price rallies rather than chasing them.
The note also covered precious metals, where Citi’s outlook ran in the opposite direction. The bank raised its near-term gold forecast to $4,500 per ounce from $4,000 and its silver forecast to $70 per ounce from $60, citing an expected improvement in broader risk sentiment.
Its 6-to-12 month gold target remained at $5,000 per ounce, though it flagged significant volatility ahead. Citi also recommended buying the dip in aluminium despite a selloff tied to the MoU news.
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