Citi, ANZ Raise Brent Crude Forecasts on Middle East Supply Disruptions

Citi and ANZ have raised their price forecasts for Brent crude oil, signaling growing concern among major financial institutions over the impact of sustained supply disruptions in the Middle East on the global market.

Banks Lift Price Targets

In a research note, Citi increased its forecast for third-quarter 2026 Brent crude to $86 per barrel. The bank cited ongoing geopolitical pressures as a primary driver for the revision.

Separately, ANZ issued a more bullish short-term outlook, raising its price forecast for Brent to $95 per barrel. ANZ's analysis points to a tightening market where inventory levels are a key concern.

Diverging Market Rationales

While both banks see upward price pressure, their underlying reasoning highlights different timelines. ANZ stated that the market is entering a "delicate adaptation phase" as inventories continue to fall, suggesting that "further demand destruction" will be necessary to rebuild stockpiles. The bank estimates the regional conflict will reduce Persian Gulf supply by 2.3 to 2.4 billion barrels in 2026.

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Citi described the current situation—including a U.S. blockade on Iran and reduced transit through the Strait of Hormuz—as "unsustainable." Analysts at the bank expect the critical waterway to reopen in the fourth quarter, potentially following new diplomatic negotiations.

Implications for Global Supply

Should the Strait of Hormuz reopen as Citi anticipates, the bank projects a significant market shift. It forecasts a potential supply surplus of 3 to 4 million barrels per day, a substantial increase from its previous estimate of approximately 2 million barrels per day.

This suggests that while the market faces near-term tightness and elevated prices due to geopolitical risk, a resolution could lead to a rapid rebalancing and subsequent price correction later in the year.