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Wall Street JournalCiti raises oil prices and predicts a bullish market scenario: it may rise to $120
Citi Research (Citi Research) analysts said in a report on Monday that despite weak market fundamentals, crude oil prices could rise to three digits if supply is interrupted due to the Middle East conflict.
Citi said that “due to the potential weakening of oil market fundamentals,” its basic forecast is still the international benchmark Brent crude oil average price of 74 US dollars per barrel in the fourth quarter and 65 US dollars per barrel in the first quarter of 2025.
However, the agency's analysts raised the average price forecast for Brent crude oil in the fourth quarter and the first quarter of next year from $80 to $120 per barrel, while increasing the possibility of such an outcome from 10% to 20%.
“Our new bull market scenario is based on concerns about supply disruptions, which we fear will be similar in size and duration to what happened in 2022,” Citi said, referring to a sharp rise in oil prices due to the outbreak of the Russian-Ukrainian conflict.
According to Citi's analysis, actual supply losses at the time peaked at less than 1 million barrels per day, far below expectations of 2 million to 3 million barrels per day.
Citi added that although the damage caused by the current escalation of the conflict between Israel and Iran may be higher than when the Russian-Ukrainian conflict broke out, “higher levels of idle production capacity and inventory levels, as well as a weak demand environment, could mean a similar price response.”
Under a bear market scenario (including OPEC+ production increases in December and the risk of supply disruptions decreases), Citi expects the average price of Brent crude oil to be $60 per barrel in the fourth quarter and $55 per barrel in the first quarter of 2025.
Citi said current risks include an Israeli attack on Iran's oil infrastructure or blocked oil flows to the Strait of Hormuz, adding that it believes the latter situation is unlikely. “Supply losses could also come from any response from Iran to the region's energy assets,” Citi added.
The market is awaiting Israel's response to Iran's massive missile attack on October 1. Overnight, US media reported that Israeli Prime Minister Binyamin Netanyahu told US President Joe Biden that Israel would not attack Iran's oil and nuclear facilities, causing oil prices to dive intraday.
However, the Israeli Prime Minister's Office later responded that Israel had heard the opinions of the US side, but would independently make the final decision based on Israel's national interests.