Citi has revised its oil price outlook for 2025, citing heightened geopolitical risks surrounding Russia and Iran.
The bank’s updated forecasts suggest increased volatility in the oil market, particularly during the first half of the year, while also acknowledging the potential for prices to ease later in the year.
This new analysis arrives as the market continues to grapple with the impact of US sanctions and shifting global policies.
Geopolitical tensions drive upward revision
“The oil outlook could see heightened, sustained geopolitical risks in Iran/Russia-Ukraine potentially wipe out the 2025 oil balance surplus, but the Trump administration appears intent on dealmaking,” Citi said in a recent note.
The bank now expects Brent crude to average $67 a barrel in 2025, an increase from its previous forecast of $62.
Citi also stated that it was raising its average WTI crude forecast to $63 per barrel.
These adjustments reflect a growing concern that geopolitical tensions will continue to drive prices in the coming year.
Quarterly forecasts reflect upward trend in prices
Citi has also revised its quarterly Brent forecasts, expecting prices to be at $75 per barrel in the first quarter, $68 per barrel in the second, $63 per barrel in the third, and $60 per barrel in the fourth.
The bank did not release its previous quarterly forecasts.
These projections point to a front-loaded risk premium that is expected to gradually subside as the year progresses.
Sanctions and Trump Administration Policies Add to Uncertainty
The recent sanctions imposed by the Biden administration on more than 100 tankers and two Russian oil producers, which led to a scramble by China and India for alternative fuel supplies, further underscore the instability within the oil market.
US President Donald Trump has also laid out a comprehensive plan to maximize domestic oil and gas production, including declaring a national energy emergency, rolling back environmental protections, and withdrawing the US from the Paris climate pact, all of which adds an extra layer of complexity and uncertainty to the market.
Trump’s actions key to future prices
Citi acknowledged that the timing and nature of President Trump’s actions regarding Iran and Russia could significantly influence oil market dynamics and pricing throughout 2025.
Despite these geopolitical risks and potential supply disruptions, Citi is currently forecasting a surplus of 0.8 million barrels per day for the year.
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