Citi on Monday cut its Brent crude oil price forecasts for late 2026 and 2027, citing expectations that oil shipments through the Strait of Hormuz will return to normal following a U.S.-Iran memorandum of understanding aimed at ending the Gulf conflict.
The bank lowered its average Brent forecast to $75 per barrel for the third quarter of 2026 and $70 for the fourth quarter, while reducing its 2027 outlook to $65 per barrel from a previous estimate of $80.
According to Citi, its revised base-case scenario assumes the agreement between Washington and Tehran will secure sustained and largely normalized oil flows through the strategic waterway by mid-to-late July.
The forecast revision follows U.S. President Donald Trump’s announcement that the memorandum had been signed by both countries, boosting market confidence that a prolonged disruption to global oil supplies may be avoided.
Citi analysts said crude prices have so far reflected optimism surrounding the memorandum itself, but have yet to fully price in the prospect of medium-term stability in Strait of Hormuz shipments.
The bank estimated that oil prices could be $10 to $15 per barrel lower than current levels if markets become convinced that uninterrupted flows through the passage will be maintained.
Citi also said limited U.S. interest in renewed military conflict and Iran’s willingness to engage diplomatically support a strategy of selling into summer oil price rallies.
Despite a softer outlook for crude, the bank raised its short-term forecasts for precious metals, increasing its three-month gold target to $4,500 per ounce and silver to $70 per ounce.
Citi maintained its bullish long-term view on gold, projecting prices could reach $5,000 per ounce over the next six to twelve months, while cautioning that volatility is likely to remain elevated.
Brent crude futures were trading more than 4% lower at around $83.23 per barrel on Monday, while spot gold rose 2.6% to approximately $4,327 per ounce as investors reacted to the U.S.-Iran agreement.