Brent crude oil could extend declines to $60 per barrel by the end of the year as disruptions in the Strait of Hormuz ease, according to Citigroup Inc. The forecast adds to a chorus of bearish outlooks for global crude markets. On Friday, Brent was trading just above $72 a barrel, and it last traded below $60 in January 2026.
Strait of Hormuz Disruption Fades
The Strait of Hormuz, which links Persian Gulf producers to global markets, was subject to a double blockade during the US-Iran war that erupted in late February 2026, throwing energy markets into disarray. However, Tehran and Washington have agreed to a memorandum of understanding (MOU) to pause hostilities, with the two sides seeking a permanent agreement. Citi analysts expect the MOU to hold and turn into a deal over the coming months, as incentives to de-escalate outweigh the alternative for the US, Iran, and much of the Middle East region.
Fundamentals Reasserting Themselves
According to a note from Citi analysts including Francesco Martoccia, "Fundamentals are rapidly reasserting themselves." They highlighted that shipping flows are normalizing, Chinese buyers remain absent, physical crude markets have weakened sharply, and inventories have drawn far less than expected. The resumption of flows through Hormuz boosts near-term supplies, adding barrels for processors after they had secured alternatives. The result has been a swift collapse in prices: Brent sank by 30 per cent in the second quarter, unwinding all gains seen during the conflict.
Bearish Outlook from Major Banks
Other Wall Street banks share Citi's bearish view. Goldman Sachs Group Inc has said the global oil market is set to swing back into oversupply as the impact of the Iran war fades and traffic through Hormuz recovers. Morgan Stanley cut its oil forecasts twice in recent weeks, flagging risks of a glut. Citi recommends "selling any summer rallies" and forecasts Brent reaching $60 to $65 a barrel by the turn of the year.
| Institution | Forecast / View |
|---|---|
| Citigroup Inc | Brent to $60–$65 by year-end; sell summer rallies |
| Goldman Sachs Group Inc | Market to swing back into oversupply |
| Morgan Stanley | Cut oil forecasts twice; flagging glut risk |
Near-Term Noise Expected
The initial period after the MOU is expected to be noisy as shipping routes normalise, insurance markets adjust, and residual logistical bottlenecks work through the system, according to Citi. However, the return of organised navigation patterns and rising traffic volumes suggests commercial operators increasingly view the risk environment as manageable rather than prohibitive.
For commodity traders and procurement teams, the rapid reassertion of fundamental supply-demand dynamics implies that the geopolitical premium in crude prices may continue to erode. With Chinese buyers remaining on the sidelines and global inventories drawing less than expected, the path of least resistance for prices appears downward. However, any escalation in the US-Iran talks or unexpected supply disruptions could introduce short-term volatility. Traders should monitor weekly EIA inventory data and shipping flows through Hormuz for confirmation of the trend.
