Citi raises Brent crude forecast to $80 per barrel as US-Iran conflict outlasts expectations

Citi has bumped its third-quarter 2026 Brent crude forecast from $75 to $80 per barrel, a $5 upward revision driven by a US-Iran conflict that has dragged on longer than the bank’s analysts originally expected. The war is now five months old, and repeated attempts at a deal have failed to restore normal oil flows through the Strait of Hormuz, the narrow waterway that roughly 20% of global seaborne crude and LNG exports pass through daily.

From $110 fears to an $80 reality

The current $80 forecast is actually a dramatic cooldown from where things stood earlier this year. During peak tensions around the Hormuz blockade, Citi’s base-case estimate for Q2 2026 had climbed as high as $110 per barrel. Bull-case scenarios floated the possibility of $150 per barrel if disruptions persisted through mid-2026.

An understanding reached between the US and Iran in June aimed to de-escalate the situation, which brought forecasts back down. Prices have still occasionally traded above $90 per barrel during peak tension moments in 2026.

Citi left its fourth-quarter 2026 Brent forecast unchanged at $70 per barrel, and its average projection for 2027 sits at $65.

What the oil price trajectory means for markets

Higher oil prices also feed directly into inflation expectations, which central banks monitor closely when setting interest rate policy. An $80 Brent environment keeps the Federal Reserve and European Central Bank in a cautious posture, making aggressive rate cuts harder to justify even if other economic data softens.

The wildcard remains the conflict itself. Five months of war has already outlasted Citi’s original assumptions. If the bank is wrong again about the timeline and the disruption extends deep into Q4 or beyond, that $70 fourth-quarter forecast starts looking optimistic. On the other hand, a genuine breakthrough in negotiations could send prices tumbling below $70 faster than most positioning can adjust for.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.