Key forecast and context
Citi, in a note led by Maximilian Layton, the bank's head of global commodities, said on Wednesday that it expects oil prices to climb sharply as conflict-driven supply disruptions intensify. The bank projects Brent crude will rise to between $110 and $120 a barrel in the coming days.
Base case assumptions
The bank's refreshed base case, which it assigns a 50% probability, assumes 4 to 6 weeks of disrupted flows, amounting to as much as 11 to 16 million barrels per day. Citi wrote that "Brent prices will rally as the conflict continues over the coming days, to $110-120/bbl," and said the market will keep rising until it reaches a level that forces political or strategic intervention.
According to the note, such intervention could take several forms: a price or market event that drives the U.S. to end its military operation; more aggressive inventory releases by the IEA or OECD; or a level that prompts global powers to "forcefully re-open the Strait." The bank underscored that escalation risks remain significant.
Alternative scenarios
Citi set out a bull case with a 30% probability in which Brent could "reach $150/bbl" and rise to as much as $200/bbl 'all-in' if Iran attacks broader energy infrastructure or if the Strait of Hormuz remains effectively shut through June.
The bank's bear case, carrying a 20% probability, envisions prices retreating to $65 to $70 by year-end, but only if a rapid U.S.-Iran deal reopens the Strait.
Other commodities
Beyond crude, Citi said it is "very bullish on aluminium," citing low inventories and the prospect of Middle Eastern smelters reducing output. The bank noted such cuts could potentially remove up to 6 percent of global aluminium supply.
Implications and limitations
The note frames a range of outcomes tied tightly to geopolitical developments affecting maritime chokepoints and regional energy infrastructure. Citi's probabilities and price bands reflect the bank's view that market-moving events would need to trigger either policy actions or physical reopening of shipping lanes to contain a sharper run-up in prices.