(Reuters) – Oil prices could be supported in the short term as U.S. President Donald Trump ramps up pressure for a peace deal involving Russia and Iran, but a resolution by the end of the year could ultimately push oil prices lower, Citi said on Monday.
The bank said Brent crude prices rose from about $60 to nearly $70 a barrel last month, partly reflecting tightening U.S. sanctions on Russian and Iranian oil and other supply disruptions.
Last week, the European Union proposed extending sanctions against Russia to include ports in Georgia and Indonesia that handle Russian oil, marking the first time the bloc has targeted ports in a third country, according to a proposal reviewed by Reuters.
Citi said one possible route through which the United States could influence affordability is through a peace deal between Russia and Ukraine and détente with Iran, which could contribute to the decline in crude oil and oil products.
“Our base case is for both Iran and Russia-Ukraine deals to be reached by this summer, bringing Brent prices down to $60-62 per barrel and driving diesel and gasoline crack down by $5-10,” Citi added.
If Russian supply disruptions keep Brent oil prices in the $65-$70 per barrel range in the coming months, Citi expects OPEC+ to respond by increasing production from excess capacity.
OPEC+ is leaning toward restarting production increases in April as it prepares for peak demand in the summer, with prices supported by tensions between the United States and Iran, three OPEC+ officials said.
Citi also said that China is purchasing Russian and Iranian oil at a discount to global standards for both purchasing and stockpiling purposes, and expects this to continue into 2026 as long as Russia/Ukraine and Iranian sanctions remain in place.
Brent crude oil futures rose 90 cents, or 1.33%, to settle at $68.65 a barrel on Monday.
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