Citi: Oil Prices Could Reach $110 if Strait of Hormuz Disruption Lasts Another Month

On April 21, Citigroup stated that if the navigation through the Strait of Hormuz remains obstructed for another month, oil prices could rise to $110 per barrel. The company indicated that if this critical shipping route continues to be blocked for the next four weeks, the global loss of crude oil and refined product inventories due to the U.S.-Iran conflict could reach 1.3 billion barrels. Citigroup noted that even if a ceasefire extension agreement is signed this week and navigation through the strait, along with crude oil production, gradually resumes throughout May, the total global inventories of crude oil and refined products are still expected to decrease by about 900 million barrels. This includes 500 million barrels already lost and an anticipated further loss of 400 million barrels due to delayed production ramp-up and conflict-related damages. Additionally, Citigroup stated that if the disruption in the Strait of Hormuz lasts for another two months, it could result in a loss of approximately 1.7 billion barrels and push oil prices up to $130 per barrel. However, Citigroup predicts that even if the conflict ends this week, global crude oil and fuel inventories will still drop to their lowest level in eight years by the end of June. The company mentioned that rebuilding these inventories could take over two years, even if the market can quickly return to a state of oversupply of 1 million barrels per day after the conflict ends.