SKN | Citi Raises Brent Forecast for 2026, Warns Prolonged Hormuz Disruption Could Push Oil to $150

Key Takeaways :

• Citi has raised its base-case Brent forecasts to $110, $95 and $80 per barrel for the second, third and fourth quarters of 2026, respectively.
• The bank now expects the Strait of Hormuz to reopen by the end of May, reflecting continued uncertainty following stalled U.S.-Iran negotiations.
• Under Citi’s 30% probability bull-case scenario, prolonged disruption through the end of June could push Brent to $150 per barrel, with average prices near $130 in the second and third quarters.
• A prolonged closure beyond June would create a substantially more severe energy shock, with implications for inflation, economic growth and global portfolio positioning.

Why Citi Is Repricing the 2026 Oil Risk

Citi has materially increased its near-term oil outlook as uncertainty surrounding the Strait of Hormuz continues to reshape the global supply picture. The bank now sees Brent crude averaging $110 per barrel in the second quarter of 2026, followed by $95 in the third quarter and $80 in the fourth quarter.

Citi assigns a 50% probability to this base-case scenario.

The change reflects a later expected reopening of the Strait of Hormuz. The bank has moved its assumption from mid-to-late April to the end of May after the United States and Iran failed to make sufficient progress during their second round of peace talks.

For global wealth holders, the significance extends beyond the oil price itself. A prolonged disruption to one of the world’s most important energy corridors can influence inflation expectations, interest rates, currencies, corporate margins and the purchasing power of internationally diversified portfolios.

Hormuz Has Become the Critical Variable for Oil Markets

Citi’s revised outlook is increasingly centered on the duration of the disruption rather than simply the amount of oil currently removed from the market.

The bank argues that risks surrounding both its bullish near-term outlook and its second-half 2026 central case are skewed to the upside because negotiations remain unresolved and the parties continue to differ over their respective red lines.

Under Citi’s bull-case scenario, which carries a 30% probability, oil flows through the Strait of Hormuz remain disrupted through the end of June at levels similar to current outages.

In that environment, Brent could reach $150 per barrel. Average prices could approach $130 during both the second and third quarters before declining toward $100 in the fourth quarter as supply conditions gradually improve.

This scenario would represent a substantially different inflationary environment from Citi’s base case and would require investors to reassess assumptions surrounding monetary policy, consumer purchasing power and corporate profitability.

Why Oil Has Not Risen Even Further

Citi also highlights an important feature of the current market: crude prices have not increased as dramatically as the physical supply disruption might initially suggest.

The bank attributes this resilience partly to substantial inventory accumulation before the conflict, releases from International Energy Agency strategic stockpiles and widespread expectations that the confrontation would be resolved relatively quickly.

These factors have provided the market with a temporary buffer.

The risk is that this cushion becomes less effective if the disruption persists. As inventories decline and expectations of a rapid resolution weaken, the market could become increasingly sensitive to each additional day of constrained flows.

This creates an asymmetric risk profile. If diplomatic progress restores normal shipping conditions, prices could ease toward Citi’s lower second-half forecasts. If disruption persists, however, the upside pressure could become considerably stronger.

What a $150 Oil Scenario Would Mean for Global Wealth

A sustained move toward $150 Brent would have implications well beyond energy portfolios.

Higher crude prices would increase transportation and production costs across the global economy, potentially prolonging inflationary pressures at a time when investors are already assessing the future path of interest rates.

For private investors, the consequences would likely differ significantly according to portfolio construction. Energy producers could benefit from higher realized prices, while energy-intensive businesses could face margin pressure. Import-dependent economies could experience greater inflation and currency stress, while exporters could receive stronger external support.

Fixed-income portfolios would also warrant closer attention. A renewed inflation shock could influence expectations for central-bank policy and government bond yields, potentially affecting both duration exposure and currency positioning.

The key issue for internationally diversified wealth is therefore not simply whether Brent reaches $150. It is whether the oil shock becomes persistent enough to alter the broader macroeconomic regime.

Citi’s Super-Bull Scenario Carries the Greater Strategic Risk

Citi has also outlined a more extreme “super bull” scenario in which the Strait of Hormuz remains closed beyond June.

The bank warns that such an outcome could have severe consequences for oil spending as a proportion of both global and U.S. economic output.

Citi estimates that oil prices would have to rise substantially beyond current levels to recreate the oil-spending burden seen during previous extreme periods. Its analysis points to U.S. all-in product prices approaching $280 per barrel and global prices around $220, implying Brent could ultimately move above $160-$180.

This is not Citi’s base-case forecast, but it demonstrates the scale of the tail risk embedded in the current geopolitical situation.

The Strategic Question for Investors Is Duration

The most important variable for investors may now be the duration of the disruption rather than the initial price reaction.

Brent was already trading around $106.68 per barrel, while West Texas Intermediate stood near $95.52, as stalled U.S.-Iran negotiations and constrained Hormuz shipments kept supply concerns elevated.

If diplomatic progress allows shipping activity to normalize, the market could begin pricing a substantial reversal in the geopolitical premium. If negotiations remain stalled and disruption continues through June, Citi’s $150 bull-case scenario becomes increasingly relevant.

For private wealth portfolios, this argues for scenario-based positioning rather than relying on a single oil-price forecast. The distinction between a temporary geopolitical premium and a sustained energy shock could materially change the implications for currencies, inflation-sensitive assets, equities and fixed income.

Closing Insights

Citi’s revised forecast highlights a fundamental shift in the 2026 oil-risk equation: the market is increasingly pricing the possibility that the Strait of Hormuz disruption lasts longer than previously anticipated.

The bank’s $110 second-quarter Brent forecast represents its central scenario, but the $150 bull case illustrates how quickly the outlook could change if supply restrictions persist through June. The more extreme scenario of a closure beyond June demonstrates an even broader risk to global inflation and economic stability.

For internationally positioned investors, the appropriate response is not necessarily to make a directional bet on crude. The more important consideration is whether portfolios are resilient to a renewed energy-driven inflation shock and the resulting changes in rates, currencies and economic growth.

For a confidential discussion regarding global portfolio resilience, cross-border asset allocation, energy-market risk, currency exposure, geopolitical risk management, or international wealth structuring, contact our senior advisory team.