Analysts at Citi are betting that Brent crude will slide to $60 a barrel by the end of the year, even if there are a few "temporary flare-ups" between the U.S. and Iran. Their reasoning? The truce signed in mid-June is likely to hold, and neither side has much incentive to break it.
Citi analysts pointed to the memorandum of understanding (MOU) between the U.S. and Iran, saying it will endure thanks to "genuine conflict fatigue" on both sides, as reported by the Financial Times on Friday. They also noted that Lebanon, a potential source of disruption, is increasingly constrained by the broader U.S. push for de-escalation. Their advice to traders: sell into oil price rallies over the summer. They see Brent trading between $60 and $65 a barrel by year-end.
The report also highlighted that shipping volumes through the Strait of Hormuz have climbed to 7 million barrels a day of crude oil, compared with 15 million before the conflict. But the analysts suspect actual volumes are higher than official data show, because many vessels have been turning off their transponders for security reasons.
As of Friday, Brent crude was trading 0.33% lower at $72.12 per barrel, while WTI crude futures were down 0.28% at $68.50 per barrel.
