Citigroup: Oil Prices Will Continue to Experience Sharp Fluctuations, Awaiting Clarity on US-Iran Agreement

According to Odaily, Max Layton, Global Head of Commodities Research at Citigroup, stated that oil prices will continue to experience sharp volatility until there is clarity on whether Iran can reach an agreement with Trump. "It is very difficult to predict whether Iran will reach an agreement. In this environment where you simply don't know if a deal will be made, the market is inevitably driven by news headlines and will experience sharp fluctuations." Crude oil fell for the third consecutive day on Thursday. Layton noted that this round of declines was partly due to "the market's hope that both sides can engage in agreement negotiations."

However, pressure remains in the physical crude oil market in the Middle East. Traders reported that a key crude oil loading terminal in Oman, located outside the Strait of Hormuz, experienced shipment delays in April, disrupting transportation plans and potentially delaying deliveries to buyers. Layton stated that over the past 12 months, the global physical crude oil market has accumulated a "considerable buffer inventory" of approximately 700 to 800 million barrels. "We are consuming these inventories relatively quickly," he said, but the impact will "gradually materialize over a longer period." He added that before genuinely lowering his oil price forecast, he needs to see whether Iran is truly ready to reach a serious agreement with the US.

Last month, after the second round of US-Iran peace talks failed to materialize, Citigroup raised its Brent crude oil benchmark price forecast by $15 to $110 per barrel and postponed the baseline expectation for the reopening of the Strait of Hormuz from mid-to-late April to the end of May. (Source: Jin10)