From 27m agoIntroduction: Oil may fall to $60 a barrel, Citi saysGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.Hopes of peace in the Middle East have been pushing oil down in recent weeks, and there could be further falls to come!Analysts at Citigroup have predicted that Brent oil could fall to $60 a barrel by the end of the year, a level last seen in January. Brent has already fallen from $126/barrel at the end of April to $72 this morning, wiping out its jump after the Iran war began.As Citi’s Francesco Martoccia puts it:
double quotation mark“Fundamentals are rapidly reasserting themselves.
Shipping flows are normalizing, Chinese buyers remain absent, physical crude markets have weakened sharply, and inventories have drawn far less than expected.”
Crude price have fallen following the resumption of flows through the strait of Hormuz, as the US and Iran try to agree a peace deal.On Wednesday the two sides held a round of indirect talks in Doha, discussing maritime traffic in the Strait of Hormuz and unfreezing Iran’s funds.Those talks have now been paused, as Iran holds a funeral ceremony for Ali Khamenei’s, the supreme leader who was killed on the first day of the conflict.There is still the risk that the conflict re-escalates (as we saw last weekend when a new round of escalating strikes between Iran and the US rocked the region).James Hosie, equity analyst at Shore Capital, warned that oil could push higher if the talks stalled, telling clients:
