CITIGROUP Inc (Citi) has raised its third-quarter Brent crude forecast to US$80 a barrel from US$75, citing the prolonged US-Iran war and continued disruption to commercial shipping through the Strait of Hormuz.
The bank maintained its fourth-quarter Brent forecast at US$70 a barrel and expects the benchmark to average US$65 a barrel in 2027.
Citi said it still expected the conflict to be resolved, but the five-month war had lasted longer than anticipated, keeping geopolitical risks elevated in the oil market.
Brent futures were trading at US$83.11 a barrel on Friday afternoon, up 62 US cents, while West Texas Intermediate gained 51 US cents to US$77.80.
Oil prices have remained highly sensitive to developments surrounding efforts to reopen the Strait of Hormuz, with uncertainty over US-Iran negotiations supporting prices after Brent briefly fell below US$80 earlier in the week on renewed hopes of an agreement.
The latest revision marks another retreat from Citi's strongly bearish outlook earlier this summer.
In early July, the bank advised investors to sell summer rallies and forecast Brent would fall to between US$60 and US$65 a barrel by year-end, based on expectations that shipping through Hormuz would normalise and Washington and Tehran would move towards a broader agreement.
Those assumptions have yet to materialise.
Shipping through the strategic waterway remains heavily constrained, while Middle Eastern oil production is still significantly below pre-war levels. Attacks on commercial vessels have also continued despite diplomatic efforts to restore safe passage.
Citi's earlier outlook had projected Brent would average just US$62 a barrel in 2026, with a bearish scenario of US$50 and a bullish case of US$75 if geopolitical disruptions materialised.
The disruptions have since materialised, with the conflict removing millions of barrels a day from global markets and keeping prices well above Citi's earlier projections for much of the second quarter.
Goldman Sachs has taken a less bearish view of the near-term outlook, saying Brent could remain between US$80 and US$90 a barrel until markets receive confirmation of a US-Iran agreement or see a significant escalation in attacks.
The bank has warned that crude could climb as high as US$120 a barrel if the Strait of Hormuz remains closed for an extended period.
Citi's US$70 fourth-quarter forecast therefore depends heavily on a restoration of oil flows through Hormuz.
Crude prices rose about 1% to settle at US$78.20 a barrel on Friday, although they still recorded a weekly decline of more than 7%.
The market remains focused on a potential Iran-Oman agreement aimed at restoring unrestricted shipping through the Strait of Hormuz, which could return millions of barrels of Middle Eastern oil to global markets.
However, uncertainty persists after Abu Dhabi National Oil Co reported attacks on three vessels transiting Hormuz, while Iran was also reported to have targeted vessels it considered hostile.
US President Donald Trump has maintained that negotiations are progressing, although differences remain over the conditions for reopening the waterway.
Meanwhile, Iran-backed Houthi forces claimed a large-scale attack against Saudi-aligned forces in Yemen, adding to concerns over the security of regional shipping routes.
Oil prices subsequently gave up some of their gains in post-settlement trading following reports that the United States could lift its naval blockade once commercial shipping through the strait resumes without restrictions.
The competing signals leave oil markets caught between hopes of a diplomatic breakthrough that could rapidly restore supplies and the continuing risk of further disruption, making developments around the Strait of Hormuz critical to the near-term direction of crude prices. - August 8, 2026
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