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Citigroup sees oil at $60 per barrel by year-end
🇬🇷 Greece /Economy & Trade

Citigroup sees oil at $60 per barrel by year-end

From Kathimerini · () Greek

Translated from Greek, summarized and contextualized by DistantNews.

At a glance

News Sources not specified Context piece
  • Citigroup forecasts oil prices to drop to $60 per barrel by year-end, citing normalizing Strait of Hormuz traffic and a weak crude market.
  • Analysts note that global energy markets are rapidly returning to normal as renewed flows through Hormuz increase supply.
  • Other banks like Goldman Sachs and Morgan Stanley also anticipate a return to oversupply as the impact of the Iran conflict wanes.

Citigroup is predicting a significant drop in oil prices, forecasting Brent crude to fall to $60 per barrel by the end of the year. This projection is driven by the normalization of traffic through the Strait of Hormuz following an interim agreement between Washington and Tehran, coupled with a weakening crude oil market.

The fundamentals are quickly reasserting themselves.

— Citigroup analystsDescribing the current state of the oil market.

Citigroup analysts, as reported by Bloomberg, stated that "fundamentals are quickly reasserting themselves" in the market. They observed that ship flows are normalizing, Chinese buyers remain absent, crude oil markets have weakened sharply, and inventories have depleted far less than anticipated. The global energy market is rapidly returning to normalcy, with renewed flows through the Strait of Hormuz bolstering short-term supplies and adding to refinery feedstock.

Ship flows are normalizing, Chinese buyers remain absent, crude oil markets have weakened sharply and inventories have depleted far less than expected.

— Citigroup analystsExplaining the factors contributing to the price drop.

This shift has led to a sharp collapse in prices, with Brent crude, the global benchmark, plummeting 30% in the second quarter. The analysts anticipate a potentially turbulent period as shipping routes adjust and insurance markets adapt. However, they believe that shipping companies increasingly view the risk environment as manageable rather than prohibitive.

The global energy market is rapidly returning to normalcy, as the resumption of flows through Hormuz bolsters short-term supplies, bringing additional oil supply to refineries that had already taken care to secure alternatives.

— Citigroup analystsDetailing the impact of normalized Hormuz traffic.

Other major financial institutions share this outlook. Goldman Sachs also predicts the global oil market will return to oversupply as the impact of the conflict in Iran fades and traffic through the Strait of Hormuz recovers. Morgan Stanley has twice lowered its oil forecasts in recent weeks, highlighting the risks of oversupply. The last time Brent crude traded below $60 was in January. Citigroup analysts continue to recommend selling on any summer rallies, expecting Brent to reach $60 to $65 per barrel by year-end.

We continue to recommend selling on any summer rally and anticipate Brent will reach $60 to $65 per barrel by the turn of the year.

— Citigroup analystsStating their price forecast and investment recommendation.
DistantNews Editorial

Originally published by Kathimerini in Greek. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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