Citi Sees $70 Brent in Near Term as Geopolitical Risks Mount

Core Viewpoint - Analysts at Citi predict that Brent Crude prices could reach $70 per barrel in the next three months due to increased geopolitical risks, raising their short-term outlook from $65 to $70 per barrel [1]. Group 1: Price Movements and Market Reactions - Early trading saw Brent Crude prices rise by 1% to above $66 per barrel as the market began to factor in potential U.S. military action against Iran and possible supply disruptions in the region [2]. - Citi analysts believe that the current oil rally has the potential to exceed their previous forecast range of $55-65 per barrel in the coming days [2]. Group 2: Supply Dynamics and Geopolitical Context - The current market is described as oversupplied, with looser fundamental balances compared to previous U.S. strikes on Iran, suggesting that any price spikes may allow for producer hedging [3]. - Protests in Iran are occurring far from key oil-producing regions, which mitigates the risk of immediate physical supply disruptions, keeping the impact on Iranian crude supply and export flows limited [4]. Group 3: Investment Recommendations - Citi advises investors to sell any Brent price rally that exceeds $70 per barrel, as market balances are expected to loosen further in the first half of the year [5].