Analysts at Citi have projected that Brent crude oil prices could decline to as low as $60 a barrel by the end of 2024, marking a significant drop from the recent highs seen amid tensions in the Middle East. This forecast is based on expectations that the global oil market will shift toward surplus supply in the second half of the year.

In a report released recently, Citi analysts pointed to the memorandum of understanding (MOU) signed between the United States and Iran in mid-June as a key factor supporting price stability. Despite occasional flare-ups, the bank suggests both parties have limited incentives to break the agreement, which helps ease fears of renewed conflict. The analysts noted that the underlying political environment now favors stabilization over confrontation, potentially allowing oil output to increase.

The firm recommends that traders capitalize on short-term price rallies this summer, as they anticipate Brent crude will trade between $60 and $65 per barrel by year-end. They described the current market dynamics as “structurally soft,” warning that increased production by oil exporters could push the market into a notable surplus.

Brent crude surged to over $126 per barrel at the end of April, following U.S. and Israeli strikes on Iran and disruptions near the Strait of Hormuz, a critical shipping route for global oil supply. This spike represented the highest price since 2022. However, prices have gradually fallen since the June agreement, with Brent trading around $71.58 a barrel at the time of Citi’s analysis.

Citi’s forecast is more conservative than many in the industry. Median estimates among Wall Street strategists put Brent at approximately $78 per barrel by the close of 2024. In comparison, Goldman Sachs recently reduced its year-end projection to $80 per barrel. The bank has cited a swift return to pre-conflict oil flows through the Strait of Hormuz as a primary driver for this outlook.

Goldman Sachs also indicated a more bullish scenario, where Brent could fall to near $60 per barrel if oil exports from the Gulf resumed fully by early July, global production exceeded expectations by over 1 million barrels per day, and demand softening persisted. This scenario aligns closely with Citi’s lower bound forecast.

Overall, the forecasts reflect a market cautiously watching geopolitical developments and supply-side responses, with most analysts anticipating continued easing of recent price pressures as volatility subsides.