May 8 (Reuters) – Oil prices could rise further if U.S.-Iran talks remain thorny, Citi said, though inventory drawdowns, Strategic Petroleum Reserve releases, reduced Chinese imports, weaker demand and periodic signs of de-escalation have helped cushion the impact.
Citi said its base case remains that disruption in the Strait of Hormuz eases by the end of May but said difficulty in achieving a U.S.-Iran deal has increased near-term upside risks.
• The bank maintained its zero-to-three-month Brent price forecast at $120 a barrel. It expects Brent to average $110 a barrel in the second quarter, before easing to $95 in the third quarter and $80 in the fourth quarter.
• China’s possible cut of about 2.4 million barrels per day in oil imports in April and May, to around 9.2 million bpd from a 2025 average of about 11.6 million bpd, has also reduced stress on the global oil market, Citi said, citing ship tracking data.
• However, Citi said “We continue to believe that oil markets are under-pricing duration and tail risks.”
(Reporting by Anushree Mukherjee in Bengaluru; Editing by Cynthia Osterman)
