Citibank Predicts Brent Crude to Fall to $60 per Barrel Due to Trade Tariffs

Citibank's latest report suggests that Brent crude oil prices may fall to $60 per barrel or even lower in the next 3-4 months due to the impact of trade tariffs. However, this price level is not expected to persist in the medium term. As oil prices decline, OPEC+ may halt production increases, and the growth of U.S. shale oil production is likely to slow due to low prices. Additionally, major global economies are expected to implement easing policies in the second half of 2025, which will help boost oil demand and drive prices higher.

Despite short-term downward pressure on oil prices, Citibank believes that this decline will create opportunities for a long-term bull market. The report indicates that from the second half of 2025, the lower oil prices over the next few quarters will lead to lower supply from non-OPEC+ and OPEC+ countries during the summer, rebalancing the market and pushing prices back up to the $60-$65 per barrel range.

Citibank has maintained a bearish outlook on oil prices since its 2025 annual outlook released in December 2024, predicting that oil prices would remain in the $60-$65 per barrel range in 2025. With the implementation of U.S. tariff measures earlier than expected, they have advanced their bearish outlook for the second half of 2025 to the second quarter of 2025.

According to Citibank's research, the fundamental scenario for Brent crude oil is expected to fall to $60 per barrel (or even lower) in the next three months, primarily due to the implementation of U.S. trade tariffs, which could lead to a decrease in demand. The main factors contributing to this short-term bearish outlook include the impact of trade tariffs, which are expected to have a negative effect on global trade and oil demand, and the slowing global economic growth, with Citibank economists lowering their 2025 global GDP growth forecast to around 2%.

Citibank's report also highlights that the supply surplus is expected to increase by 1.3 million barrels per day in the second quarter, putting pressure on the market. However, despite the short-term bearish outlook, Citibank analysts believe that as the market supply and demand gradually balance out in the second half of 2025, oil prices will begin to rise. Specifically, low oil prices will limit production growth, helping to rebalance the market.

OPEC+ is expected to maintain its production levels from May until mid-third quarter of 2025, and then gradually phase out production cuts starting in August 2025. Meanwhile, analysts expect Iraq to strengthen its compliance with the production cut agreement, which, when revised, will result in a supply reduction of more than 800,000 barrels per day in the third quarter of 2025, far exceeding the quarterly trade shock's 300,000 barrels per day impact on demand. Non-OPEC+ supply growth forecasts for 2025 have been lowered by less than 100,000 barrels per day to approximately 900,000 barrels per day.

High-cost producers in North America will feel the pressure of prolonged low oil prices, and oil supply in the region is expected to decline in the fourth quarter of 2025. Citibank has lowered its growth forecast for U.S. shale oil and Canadian supply in the fourth quarter of 2025 by a combined 300,000 barrels per day. Geopolitical risks, such as sanctions on Iran and Venezuela, may also limit oil supply. Citibank has adjusted its expectations for OPEC+ and non-OPEC+ oil-producing countries, with the market surplus in the third quarter of 2025 expected to be a relatively mild 300,000 barrels per day, down from the previously expected 800,000 barrels per day. Similarly, the average for the fourth quarter of 2025 is expected to be 200,000 barrels per day, down from the previously expected 500,000 barrels per day. On average, the market supply and demand balance for 2025 is expected to be tight by 0.3 million barrels per day, but the second quarter of 2025 is still expected to see a surplus of 1.3 million barrels per day, which should continue to put downward pressure on prices and futures structures in the near term.

Citibank's report notes that the current price does not indicate a significant reduction in production. Physical oil prices would need to fall to the mid-$30s per barrel to trigger supply cuts that would have a major impact on the global oil market balance, with an initial estimate of around 200,000 barrels per day. The report concludes with a risk disclosure and disclaimer, stating that the market is risky and that investments should be made with caution. The article does not constitute personal investment advice and does not take into account the individual investment goals, financial situation, or needs of users. Users should consider whether any opinions, views, or conclusions in the article are suitable for their specific circumstances and act at their own risk.