Citi Group

Citi Group expects oil prices to continue falling in the coming months, forecasting Brent crude to drop to $60 per barrel by the end of the year, as tensions in the Strait of Hormuz subside and shipping returns to normal.

The bank's analysts said in a note reported by Bloomberg that the current phase may see temporary volatility, but it will gradually decline as shipping and marine insurance operations stabilize.

The analysts noted that the resumption of normal shipping routes, along with easing logistical bottlenecks, will help calm oil markets in the coming period.

They added that the increase in vessel traffic and the return of regular navigation patterns reflect growing confidence among shipping companies that risks have become manageable and no longer pose a major obstacle to commercial operations.

Expectations of continued calm

Citi Group suggested that the current memorandum of understanding will hold and turn into an agreement in the coming months, as various parties prefer to continue the de-escalation path.

The bank believes that the motives for maintaining stability outweigh the chances of a return to escalation, which supports the continued flow of energy supplies to global markets.

Supply stability pressures prices

The bank's analysts see that the return of normal supplies, along with easing geopolitical concerns, will reduce the risk premium that was added to oil prices during the period of tensions.

Continued progress on this path would increase available supply in markets, potentially pushing Brent crude prices to continue their gradual decline until the end of the year.

Despite the positive outlook, the bank noted that oil markets will continue to monitor developments in the region to ensure that understandings are implemented and shipping returns fully.

Any unexpected disruptions or setbacks in implementing agreements remain a factor that could bring volatility back to global energy markets.

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