Citi cuts Brent forecasts as U.S.-Iran MoU points to Strait of Hormuz flow normalization

June 15 (Reuters) - Citi on ‌Monday cut its ​average ​Brent crude forecasts to $75 and $70 per barrel for the third and fourth quarters of 2026, respectively, citing expectations that the ‌Strait of Hormuz trade flows will resume and normalize after ⁠the U.S. and Iran approved a memorandum of understanding to end the war in the ‌Gulf.

The bank also lowered its ‌2027 Brent forecast to $65 per barrel from $80 previously, shifting its outlook toward what had been its bear-case scenario, it said in a ​note.

Citi said its new base case, assigned a 60% probability, assumes the MoU is signed and negotiations ultimately secure sustained flows through ⁠the Strait of Hormuz at largely normalized rates by mid-to-late July. U.S. President Donald Trump said ​on Monday that the memorandum had been signed by the United States and Iran.

"In our view, the market is ​pricing the MoU itself, but not an ‌agreement that secures SoH flows over the medium term; otherwise, crude oil prices would likely be ~$10–15/bbl lower than ⁠they are today," said analysts at the bank.

The brokerage added that limited U.S. appetite for renewed conflict and Iran's willingness to engage support a strategy of ⁠selling summer oil rallies.

In the same note, Citi raised its 0–3 month gold price ​forecast to $4,500 per ounce from $4,000, and its silver price forecast to $70 per ounce from $60, saying broader risk sentiment is likely to improve.

The bank maintained a bullish 6–12 ‌month gold view at $5,000 per ounce, while warning of significant volatility, while also recommending buying the dip in ‌aluminium, despite a selloff following the U.S.-Iran MoU news.

Brent crude futures were trading ⁠more than 4% lower at ‌around $83.23 a barrel as ​of 1422 GMT, while spot gold was up 2.6% at around $4,327.34 an ounce. [O/R] [GOL/]

(Reporting by Pranav Mathur in Bengaluru; Editing by ‌Chizu Nomiyama )

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