Citi's $60 Oil Forecast Highlights Fragile Assumptions Amid Hormuz Normalization

Citigroup analysts forecast Brent crude prices falling to $60-65 per barrel by year-end as shipping through the Strait of Hormuz normalizes following a U.S.-Iran memorandum of understanding. This outlook, detailed in notes referenced by Bloomberg and OilPrice.com, attributes the decline to fading disruptions, weak Chinese demand, and physical market weakness despite multi-decade low inventories. Goldman Sachs echoes the caution, projecting a 3 million barrels per day global surplus in 2027 even after accounting for over 1 million bpd in strategic petroleum reserve rebuilding, leaving a net 2 million bpd oversupply. Morgan Stanley has similarly slashed forecasts, cutting Q3/Q4 2026 Brent estimates to $75 per barrel amid faster-than-expected Hormuz flows and flagging 2027 risks. Earlier in 2026, Citi had raised base-case forecasts to $110 amid persistent disruptions, underscoring how quickly geopolitical assumptions shift. These revisions expose underlying fragility in energy models that often overlook rapid supply rebounds and demand softness, with Reuters noting Citi's June cuts to $75/$70 for Q3/Q4 2026 tied directly to the MoU and normalized transit. The convergence across banks suggests markets may have priced in overly optimistic scarcity premiums during the conflict phase.