Citigroup warns oil could hit $90 if Strait of Hormuz is closed

According to Citigroup, the closure of the Strait of Hormuz could cause Brent crude oil prices to soar to as high as $90 per barrel. However, the company also argued that a prolonged shutdown of this critical waterway is unlikely.

Analysts, including Anthony Yuen and Eric Lee, referenced the bank’s current optimistic scenario, stating, “The closure of the strait could lead to a sharp increase in prices. However, we believe the process would be brief, not lasting several months, as all efforts would be focused on reopening it.”

The Strait of Hormuz is a narrow waterway at the entrance of the Persian Gulf. Approximately one-fifth of the world’s daily oil production, including from leading OPEC producers Saudi Arabia and Iraq, passes through it.

Citigroup estimates that a disruption could interrupt the flow of about 3 million barrels of oil per day for several months.

According to Citigroup, any interruption in Iran’s crude oil exports might have less of an impact on prices than anticipated. The bank noted that the country’s shipments have already decreased, with Chinese refineries purchasing less.

Brent futures are currently trading at around $77 per barrel.