Brent crude could jump to around $90 a barrel if the Strait of Hormuz is closed, according to Citigroup Inc., which added that a prolonged halt to shipping through the crucial waterway would be unlikely.“Any closure of the Strait could lead to a sharp price spike,” analysts including Anthony Yuen and Eric Lee wrote in a note, citing the bank’s current bullish case scenario. “But we think the duration should be short, as all efforts would focus on a reopening, so that it should not be a multi-month closure.”
The Strait of Hormuz is a narrow waterway at the entrance to the Persian Gulf, through which about a fifth of the world’s daily output passes, including from major OPEC producers Saudi Arabia and Iraq. Citigroup’s prediction implies around 3 million barrels a day being disrupted over several months.
Any disruption to Iranian crude exports could have a smaller price impact than expected, according to Citigroup. The country’s shipments have been falling and Chinese refineries are buying less, the bank said.Brent futures are currently trading around $77 a barrel.
The Strait of Hormuz is a narrow waterway at the entrance to the Persian Gulf, through which about a fifth of the world’s daily output passes, including from major OPEC producers Saudi Arabia and Iraq. Citigroup’s prediction implies around 3 million barrels a day being disrupted over several months.
Any disruption to Iranian crude exports could have a smaller price impact than expected, according to Citigroup. The country’s shipments have been falling and Chinese refineries are buying less, the bank said.Brent futures are currently trading around $77 a barrel.
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