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Citigroup Remains Bearish on Oil Outlook


Citigroup’s commodities team continues to hold a bearish outlook on oil, projecting a “finely balanced” market in 2025 with the potential for Brent crude to drop to $55-$60/bbl by the second half of next year. The anticipated pricing downdraft in 2022 is seen as a significant concern.

Although the report acknowledges that OPEC+ members are expected to comply with production cuts, Citigroup believes that supply and demand balances will deteriorate, particularly in the coming year.

Citigroup’s base case assumes that OPEC+ will extend its first-quarter 2024 quotas for the full year. However, even with these cuts, the bank predicts a modest surplus of 100,000 b/d, with supply slightly outpacing demand. In the event of any major disruptions in 2024, the cartel may release additional oil, as Saudi Arabia and Russia have approximately 2 million b/d of easily accessible spare capacity in the Middle East and North Africa.

The bank has revised its price target for Brent this year to $74/bbl, down $1/bbl from previous estimates. Citigroup expects Brent to average around $60/bbl in 2025, $10 below its initial projection. The six-to-twelve-month target for Brent is set at $72/bbl, while West Texas Intermediate is forecasted to average approximately $68/bbl.

These long-term projections are based on Citigroup’s belief that supply gains will outpace demand growth. Even if OPEC+ cuts are maintained throughout next year, there could still be a daily surplus of 700,000 b/d. If these cuts are discontinued, supplies could increase by 1.2 million b/d.

Oil Price Outlook: Managing Price Risks in a Changing Landscape

The recent report from Citibank’s analysts offers valuable insights into the oil market and provides recommendations for investors and commercial oil companies. With a focus on managing downside price risks, the bank suggests considering longer-dated insurance. Looking ahead to the next one to two years, it is important to be aware of the price dynamics.

Price Projections and Potential Scenarios

Analyzing the Brent futures’ curve, the report indicates prices in the $73-$75/bbl range for the aforementioned period. Interestingly, this projection stands in contrast to the bank’s own forecast of a $55-$60/bbl price range for the second half of 2025.

To provide a comprehensive perspective, Citibank presents both a “bull case” and a “bear case.” The “bull case” acknowledges the possibility of Brent prices reaching the high $80s/bbl to even $90/bbl, albeit with a 15% likelihood. Conversely, the “bear case” suggests that crude prices could dip into the $50s/bbl, with a 25% probability.

Factors Influencing the Outlook

The bank’s outlook derives from several key factors. First, it takes into account an anticipated slowdown in global oil demand growth. Estimates indicate a decline from approximately 1.9 million b/d in 2023 to 1.3 million b/d this year and just 700,000 b/d in 2025. This projection aligns with the analysts’ forecast of global GDP growth at 2.5%, which would typically imply 1.2 million b/d of demand growth.

However, the rise of electric vehicles (EVs) brings about a paradigm shift. Citibank notes that out of the estimated 80 million cars sold annually, around 30 million will be “new energy vehicles.” This category includes battery electric, plug-in hybrid, and traditional hybrid vehicles. The bank’s projections suggest that these EVs are likely to displace approximately 500,000 b/d of traditional petroleum demand.


In conclusion, Citibank’s report offers valuable insights into the future of the oil market. It emphasizes the importance of managing price risks, especially considering the evolving dynamics of the industry. As the world transitions towards greater adoption of electric vehicles, it becomes crucial for investors and oil companies to navigate this changing landscape effectively.

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