With the ongoing conflict in Iran, crude oil and refined oil prices surged, Citi Research issued a research report saying. The broker raised its forecasts for Brent oil futures and New York oil spot prices due to the persistent risks.

Its outlook for the extremely short term over the next 3 months has become more optimistic, currently predicting that prices will rise to US$110-120 per barrel under the base case scenario, with current price risks skewed to the upside.

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Citi Research's optimistic scenario forecasts Brent oil futures prices hiking to US$150 per barrel. However, the broker's base case scenario predicts that the situation will eventually cool down within 4-6 weeks, with Brent oil futures prices falling back to US$70-80 per barrel by the end of the year.

Citi Research also revised its forecast for the spread between Brent and New York oil futures prices, reflecting various scenarios of the Iran conflict. Under the base case scenario, Brent oil futures are expected to be at US$110 in the short term, falling to US$75 by 4Q26.

The broker anticipated the spread between Brent and New York oil futures to be US$12 per barrel over the next 3 months (implying New York oil futures to be at US$98 in the short term), with the spread for 1Q/2Q/ 3Q/ 4Q26 being US$/ 12/ 8/ 6 respectively, narrowing to US$5 next year. The spread needs to reflect the current cost of US$7-10 per barrel for shipping to Europe.

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