Hormuz reopens, demand weak: Citigroup predicts Brent to fall to $60

Brent oil Maybe drop in price to $60–65 per barrel by the end 2026, analysts think Citigroup.

The reason is not the market’s sudden love for cheap energy, but the return of the arithmetic familiar to the oil world: supplies through the Strait of Hormuz are gradually being restored, the geopolitical premium is declining, and demand, especially from China, looks noticeably weaker than previous expectations. According to ReutersCiti has already revised down its forecasts for Brent following US-Iran agreements related to the resumption of shipping flows through Hormuz.

In a fresh note, Citigroup analysts led by Francesco Martoccia noted that “fundamentals are quickly returning to the fore.” Translated from the language of investment banks, this means a fairly simple picture: there is more oil, there are no more buyers, and the fear of shortages is gradually disappearing.

Strait of Hormuz brings oil back to market

One of the key factors was the restoration of traffic through the Strait of Hormuz, through which much of the world’s seaborne oil exports pass. During the crisis, supplies were disrupted, and the market included in the price the risk of a prolonged shortage of raw materials.

Now the situation is changing. According to information Reuterscross-Strait supplies have partially recovered, and Saudi Arabia, Kuwait and other Gulf producers are increasing exports. Against this background, Brent was trading at around $72 per barrel on July 3, almost returning to the levels that existed before the conflict escalated.

Citigroup believes that with the further restoration of shipping, oil may lose another part of the “war premium” that the market added to the price due to the threat of disruptions. The premium disappears quickly when tankers re-route. The problem is that geopolitics has a way of returning uninvited, usually at the most inconvenient moment.

Weak China and crowded market

Citi also pays attention to China, which remains one of the most important factors in the global oil market. Chinese buyers, according to the bank, are not yet showing the same activity, and the physical oil market has noticeably weakened.

According to Reutersindependent Chinese refineries in Shandong began actively buying Middle Eastern crude at discounts as supply increased. Discounts on certain varieties reached $5–9 per barrel, which in itself shows that sellers have to convince the market not with slogans, but with price.

An additional signal for Citi was the state of its reserves. They declined more slowly than market participants expected. This reinforces the feeling that the oil shortage was temporary and that the global supply chain is returning to surplus fairly quickly.

Brent has already lost about a third from recent highs

After peaks associated with the crisis around Iran and the Strait of Hormuz, Brent has noticeably decreased. According to Reuters pollanalysts for the first time in five months lowered their oil forecasts for 2026: the average estimate for Brent was reduced from $90.44 to $84.50 per barrel.

Citigroup goes further than most market participants. The bank recommends selling oil during the summer boom and expects a range of $60–65 per barrel at the turn of 2026–2027. This forecast is based on the assumption that shipping through Hormuz will continue to normalize and there will be no major new escalation in the region.

Other banks have also become more cautious. UBS lowered its Brent forecast for the third and fourth quarters of 2026 to $80 per barrel. Goldman Sachs previously suggested that with an accelerated supply recovery and weak demand, Brent could fall to around $70 at the end of 2026 and to $60 in 2027.

Why the forecast may not come true

Citi’s scenario seems logical, but it’s not a guarantee. The oil market always lives between two extremes: “there is too much oil” and “where to urgently buy oil before everything catches fire.” Any new conflict around Hormuz, Iran, the Red Sea or major exporters could return the risk premium in a matter of days.

For now, the market is leaning toward a calmer version of events. If shipping does continue to recover and China does not increase demand, Brent could gradually move lower. For consumers and importing countries, this means relief; for oil exporters and budgets tied to expensive oil, less pleasant mathematics.

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