Citi Lowers Brent Price Forecasts for 2024 and 2025 Amid Oversupply Concerns

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Citi Research lowered its Brent price forecasts for 2024 and 2025, citing oversupply concerns. The 2024 Brent price forecast was cut by $1 to $74 per barrel, and the 2025 forecast was reduced by $10 to $60 per barrel. However,

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Citi expects prices to remain above $70 per barrel in 2024 due to OPEC+ efforts to keep global oil markets balanced. Recent tensions in the Middle East, specifically in the Red Sea, could contribute to near-term upside in the risk premium.

The geopolitical situation, such as the U.S. and Britain launching strikes against Houthi military targets in Yemen, adds uncertainty to the oil market.

Citi analysts anticipate OPEC+ to maintain Q1 2024 production cuts throughout the year and start tapering them only in H2 2025. Despite extended cuts, challenges are foreseen in 2025, with a potential surplus making it difficult to sustain $70/bbl on a Brent basis.

Global oil markets may face a 1.2 million bpd surplus on average if OPEC+ begins tapering production cuts in H2 2025.

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