Citi Raises Brent Crude Forecast to $150: Strait of Hormuz Risks Brew, How High Can Oil Prices Rise?
TradingKey – On April 26, ET, Citigroup raised its Brent crude oil price forecast for 2026 to $150. Given the stalemate in U.S.-Iran negotiations leading to the continued blockade of the Strait of Hormuz, Citi believes the Middle East situation has evolved from a short-term risk into a structural variable that could persistently disrupt global supply.
According to its latest assessment, Brent could first enter the $110 to $120 range over the next four to six weeks; if more widespread energy infrastructure continues to be damaged, or if normal passage through the Strait of Hormuz remains unrestored by June, the probability of Brent surging to $150 will rise significantly.
Oil prices gapped higher again at the open today (April 27). As of the European session, Brent crude has stabilized above the $100 mark, trading at $101.50, while WTI rose to $96.53.
The crux of Citi’s decision to raise its oil price forecasts lies in its assessment that supply disruptions are persisting for an extended period.
On April 20, Citi’s research team noted that even if the ceasefire is extended, global crude inventories could shrink by approximately 900 million barrels due to delayed production ramp-ups, logistical bottlenecks, and conflict-related damage, suggesting the market has not truly eased despite the truce.
On April 26, Citi’s latest projections raised Brent forecasts for the second, third, and fourth quarters to $110, $95, and $80, respectively; under a bull case scenario assuming the strait remains blocked through late June, prices could surge to $150.
By April 27, Brent crude prices climbed back above $100, indicating that traders are continuing to price in a geopolitical risk premium, as market logic remains dominated by geopolitical tensions.
The Strait of Hormuz remains the focal point of geopolitical risk; any prolonged restriction would affect not just crude exports but also shipping, insurance, port logistics, and downstream refinery procurement cycles, while sustained pressure on physical supply chains continues to support elevated oil prices.
Institutional sentiment remains largely aligned. J.P. Morgan stated that if disruptions in the Strait of Hormuz persist past mid-May, Brent could initially climb to $120–$130, with $150 not out of the question if the outage is prolonged. Goldman Sachs emphasized that current Middle East production cuts will push the global oil market into a significant deficit in the second quarter, suggesting that upside risks are not only present but could exceed baseline projections.
Currently, there are three aspects that require attention. The first is the transit situation in the Strait of Hormuz; as long as there is no substantial improvement in the restoration of this passage, the duration for which oil prices remain elevated will continue to lengthen.
The second is the inventory and spot structure of the crude oil market. According to Reuters, global crude inventories may continue to decline, and even a phased extension of the ceasefire may not necessarily bridge the supply gap quickly. The widening spread between spot and futures prices implies that the market is already paying for prolonged supply pressure.
The third point to note is the macro transmission of high oil prices. If oil prices continue to surge, the first to be affected will not be energy stocks, but rather inflation and interest rate expectations. J.P. Morgan points out that persistent high oil prices will heighten global recession risks. For investors, this means that the upside in oil prices is not only a positive for the crude oil sector but also compresses the room for the equity market, bond market, and high-valuation growth assets.
Consequently, when Citi raised its oil price forecast to $150, it was not conveying a conclusion that oil prices would definitely hit $150, but rather that geopolitical risks have not yet concluded and the market must continue to pay for uncertainty.
If subsequent negotiations truly advance, transit through the strait is restored, and inventories begin to be replenished, only then will oil prices have the opportunity to move from a high-risk premium model back to more conventional supply-and-demand pricing.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
