Citi: Hormuz Risk Premium Fading, Oil Prices Could Drop to $60
Alina Collins
Citi forecasts Brent crude could fall to $60 a barrel by year-end as the Strait of Hormuz disruption fades and fundamentals reclaim the driver's seat — meaning the 30% Q2 slide may be just the beginning.
Why does Citi think oil has further to fall?
The core argument: shipping disruptions around the Strait of Hormuz are easing, and the risk premium — the extra price baked in on fears of route closures — is draining out.
This means → oil is shifting from "geopolitical pricing" back to "supply-demand pricing," and the supply-demand picture is not kind to sellers.
Citi analyst Francesco Martoccia flags four signals: shipping flows normalizing, Chinese buyers still absent, physical crude markets sharply weaker, inventory draws well below expectations — each pointing to oversupply.
Where is oil now, and what is Citi's target?
Brent traded near $72 a barrel at the time of the report, already down roughly 30% in Q2 — wiping out all gains from the conflict period.
Citi projects Brent will reach the $60–65 range by year-end. The last time it broke below $60 was January this year.
The bank's tactical advice is blunt: "sell any summer rally."
Could things get choppy in the short term?
Citi concedes near-term volatility is likely: shipping routes are still re-adjusting, insurance markets need to adapt, and residual logistics bottlenecks remain.
Yet the analysts judge that commercial operators increasingly view current risks as "manageable, not insurmountable" — sailing patterns and transit volumes are both recovering.
In plain terms = prices may bounce briefly, but the direction is set — and the bounce is the selling window.
Is Citi alone in this call?
Far from it. Goldman Sachs argues the global oil market will return to oversupply as the Iran conflict impact fades and Hormuz transit volumes recover.
Morgan Stanley has already cut its oil-price forecast twice in recent weeks, flagging oversupply risk.
This reflects a forming Wall Street consensus on the bearish side; whether a summer rally materializes will be the key test of that collective call.
Content is for reference only, not financial advice.