U.S. President Donald Trump may be able to address rising affordability concerns at home if diplomatic progress materializes on two major geopolitical fronts, according to a client note from analysts at Citi.
Media reports indicate representatives from the United States and Iran are scheduled to meet in Geneva on Tuesday to discuss Iran's nuclear enrichment activities. The talks are unfolding against a backdrop of increased military tension in the Middle East as the U.S. moves additional forces into the region, and after repeated threats by Trump to use military action if Iran does not accept a U.S. agreement.
Simultaneously, Ukrainian and Russian negotiators are reported to be convening in the same Swiss city for a two-day meeting mediated by the United States. Trump has been pushing Kyiv to accept an arrangement intended to bring an end to the conflict between Ukraine and Russia. Observers remain cautious about the prospects for a meaningful breakthrough in those discussions.
Both sets of negotiations coincide with growing domestic pressure on Trump to deliver relief from elevated living costs. Economists cited in the Citi note describe these costs as particularly burdensome for lower-income American households despite what the firms termed resilient broader economic activity. U.S. inflation has persisted above the Federal Reserve's 2% target, contributing to policy interest rates that remain at levels not seen in nearly 20 years.
Affordability and the broader health of the economy have emerged as central concerns for voters ahead of the U.S. mid-term elections in November, concerns that could influence congressional control currently held by Trump-aligned Republicans.
"One channel through which the U.S. may be able to influence affordability is via peace deals between Russia and Ukraine, and via de-escalation/dealmaking with Iran," the Citi analysts wrote.
They argued these agreements could translate into lower prices for crude oil and related refined products such as diesel, gasoline, and jet fuel. Citi said such declines would produce a deflationary impulse that could, in turn, enable the Fed to implement more rate cuts than would otherwise be likely.
In their baseline forecast, the analysts expect both a Russia-Ukraine settlement and an Iran deal to be reached "by or during the summer of this year," and said those outcomes would help drive Brent crude prices down to a range of $60-$62 per barrel. They also noted that diesel and gasoline premiums could compress, offering tangible relief for motorists at the pump.
While Citi's assessment links diplomatic progress with potential downward pressure on energy prices and a consequent easing of affordability constraints, the note also underscores the contingent nature of those outcomes given current market and geopolitical dynamics.