Citibank: If the Middle East conflict continues to escalate, oil prices may soar by more than 60%!

Citibank said that in the first quarter of 2025, oil prices may reach a high of $120 per barrel, which means a 62% increase. As of publication, the price of Brent crude oil is around $74.21 per barrel.

This price is based on Citi's bullish expectations for oil prices, provided that the conflict in the Middle East escalates and causes supply disruptions. Eric Lee (Eric Lee), an energy strategist at Citibank, said that if Israel retaliates against Iran's recent missile attack, this could jeopardize Iran's key oil production facilities, thereby reducing production and generating upward momentum in oil prices.

In an interview on Wednesday, Lee said, “There are various scenarios that may affect Iran's oil production and exports of millions of barrels every day. Under these circumstances, we may see a situation similar to the sharp rise in oil prices after the Russian-Ukrainian conflict broke out in 2022.”

Of course, the bullish forecast for Brent crude to rise to $120 per barrel is in stark contrast to the bank's basic expectations, which expect the price of crude oil to remain around $74 per barrel and then drop to $60 per barrel by the end of next year.

Israel also said that in retaliation for Iran's October 1 missile attack, they will attack military targets rather than nuclear or oil facilities.

Li said that Citi's basic expectations mean that oil prices may drop by 18%, mainly because Saudi Arabia, the United Arab Emirates and other major oil producers can step in if supply is interrupted.

He estimated OPEC+ could have an additional production capacity of up to 6 million barrels per day. At the same time, oil demand has also encountered some “problems,” he pointed out the weakness of the Asian economy.

Commenting on the bank's forecast, he said, “This is a very tricky situation, a very dualistic market, which is why we are cautious about being bullish.”

Other oil forecasters also predict that oil prices may soar due to the escalation of the situation in the Middle East, although some think there is little risk of supply disruptions in Iran. The Saudi oil minister said in a recent conference call that oil prices could drop by as much as 33%, adding that he believes OPEC+ oil producers are too high for oil production.