Citi and Goldman Target $60 Brent by Year-End, Morgan Stanley Holds $75 as Hormuz Flows Recover

Brent crude settled at $72.12 per barrel on Thursday's ICE close, the final settlement before the US Independence Day holiday. The contract has fallen roughly 24% over the past month, per Trading Economics data. Oil is tracking a fourth consecutive weekly loss as tanker traffic through the Strait of Hormuz partially recovers from war-related disruptions.

Citi Makes the Boldest Bear Call

Citigroup became one of the most bearish voices on oil this week, forecasting Brent could fall to between $60 and $65 per barrel by the turn of 2026. The bank cited four drivers for its call:

• Normalization of shipping flows through the Strait of Hormuz following a partial reopening
• An anticipated conversion of the current 60-day US-Iran memorandum of understanding into a durable accord
• Weak Chinese crude buying suppressing physical crude premiums
• Lower-than-expected inventory draws in the major consuming nations

Citi characterized itself as "one of the most bearish voices in the market" and recommended clients sell any summer price rallies. Saudi Arabia has already recovered roughly 90% of its pre-war export volumes, according to Reuters. Kuwait and Iran registered the largest June production gains, and the remaining supply gap has not yet fully cleared the strait.

Goldman Projects a Surplus of 3 Million Barrels Per Day

Goldman Sachs reached a similarly bearish conclusion by a different route. The bank projects a 3 million barrel-per-day global surplus for 2027. Roughly 1 million bpd of that total would come from strategic petroleum reserve rebuilding by consuming nations. The remaining 2 million bpd represents excess supply the market must absorb through lower prices.

Goldman's 3 million bpd surplus, held for 12 months, equals roughly 1.1 billion barrels of excess crude. That figure is nearly three times the current US Strategic Petroleum Reserve, which holds approximately 363 million barrels. A surplus of that scale, without significant demand acceleration, implies Brent cannot sustain prices above the mid-$60s for long. Goldman's Brent price target rounds to approximately $60 per barrel, matching Citi's year-end call.

Morgan Stanley Holds $75 and the Gap Is the Story

Morgan Stanley reduced its 18-month Brent forecast but held its target at approximately $75 per barrel, leaving a $15 gap against Goldman and Citi. For producers, this gap is not abstract. A Permian Basin operator producing 50,000 barrels per day earns roughly $274 million more annually at $75 Brent than at $60, before hedging. That difference drives capital spending plans, dividend decisions, and drilling schedules.

The two forecasts rest on different assumptions about three conditions. Goldman and Citi believe Hormuz traffic will fully normalize, the US-Iran MOU will convert into a binding deal, and Chinese demand will stay soft. Morgan Stanley assigns meaningful probability to one or more of those conditions failing. If Iran disrupts transit again once the 60-day period expires in early August, Morgan Stanley's $75 becomes the floor, not a ceiling.

The Political Wildcard: Hormuz After Khamenei

Iran's Supreme Leader Ayatollah Ali Khamenei passed away in late June 2026, with his funeral scheduled for approximately July 9, per reports reviewed by Oil Authority. Iran's joint military command has already stated that tankers transiting Hormuz must follow Tehran-approved routes. The command also intends to impose transit fees once the 60-day toll-free arrangement expires. A leadership transition adds uncertainty about whether any successor would honor the existing MOU terms.

Tanker traffic remains far below pre-war norms. Daily Hormuz crossings reached 30 to 60 vessels recently, against a pre-war baseline of approximately 130 per day. Weekly traffic jumped from 138 vessels to 258 in a single week, but absolute levels remain less than half of normal. Both Citi and Goldman assume the remaining recovery happens without disruption, which is exactly the assumption that Iran's new leadership could invalidate.

What $60 Brent Means for North American Producers

WTI settled at $68.78 per barrel on Thursday, and Western Canadian Select settled at $56.34 per barrel, per market data. At Citi's target of $60 Brent, WTI would trade near $56 to $58, maintaining its typical $3 to $4 discount. WCS, currently at a $12.44 discount to WTI, would fall toward $44 to $46 per barrel. Many Canadian oil sands projects carry breakevens in the $45 to $55 WTI range, putting them at or near threshold under the Citi-Goldman scenario.

As Oil Authority reported Thursday, Iraq's production deficit alone stands at 2.24 million barrels per day versus pre-war levels. Despite that shortfall, Brent has already dropped 24% over the past month. The EIA weekly petroleum inventory report arrives Wednesday, July 9. OPEC+ approved an additional 188,000 bpd increase for August, and analysts disagree sharply on whether the market can absorb it without another price leg down.