Citi says geopolitics to support oil near term; peace deals seen lowering prices

Citibank analysts released a report in New York on Monday indicating that geopolitical tensions will continue to support oil prices in the near term, while potential peace deals could lead to price reductions in the medium to long term. The financial institution's research division highlighted ongoing conflicts and political instability in key oil-producing regions as primary factors maintaining elevated crude prices despite concerns about global economic slowdown. According to the Citi analysis, the current geopolitical landscape, particularly tensions in the Middle East and production disputes within OPEC+, has created a premium in oil prices that is expected to persist for the coming months. The report suggests that markets are pricing in continued supply risks, with Brent crude potentially maintaining its current range of $80-90 per barrel through the end of the third quarter. However, the report also notes that successful diplomatic efforts to resolve major conflicts, particularly in regions critical to global oil supplies, could trigger a significant correction in prices. Citi analysts suggest that any meaningful peace agreements that normalize production levels in affected countries could lead to a 10-15% reduction in oil prices within six months of implementation.