The global oil market stands at a precarious inflection point, as rising geopolitical tensions and shifting production dynamics threaten to reshape price trajectories. Citi’s latest Oil Monitor warns of a binary path for Brent crude either breaching the $70 mark or slipping into the $50s largely hinging on diplomatic developments involving Iran and Russia. The failure of nuclear negotiations and the impasse in ceasefire talks between the U.S. and Russia over Ukraine are intensifying fears of a supply shock. Notably, a disruption of up to 1 million barrels per day from Iran looms as a “tail risk,” according to Citi, though some analysts suggest that current tensions may be part of an “escalate to de-escalate” strategy, designed to bolster negotiating positions.
Brent crude briefly surged to $67 on the back of this uncertainty before retreating below $65, with trading now concentrated between $60 and $66. The forecast remains conservative, with Citi holding to a $60 near-term baseline while acknowledging volatility fueled by both diplomacy and tariffs.
Layered atop this uncertainty is the upcoming June 1 OPEC+ meeting, which could redefine supply fundamentals. The alliance is reportedly considering a production increase of 411,000 barrels per day in July a move that would signal a pivot from price defense to market share preservation. Such a decision would follow recent output increases in May and June and could further pressure prices already wobbling from higher-than-expected U.S. crude inventories, which rose by 1.3 million barrels last week, per the EIA.
The upcoming fifth round of U.S.-Iran nuclear talks, set for May 23 in Rome, adds another dimension to the supply outlook. While the U.S. pushes for a complete halt to Iran’s uranium enrichment, Tehran insists on retaining its right to enrich for peaceful purposes. A breakthrough could unlock additional Iranian oil exports, exacerbating existing oversupply risks.
Meanwhile, broader macroeconomic currents are amplifying market sensitivity. President Trump’s “Big, Beautiful Bill,” passed narrowly by the House, could expand federal debt by $3.8 trillion over the next decade, stoking inflationary concerns. At the same time, a rebound in U.S. private sector activity and falling jobless claims are offering mixed signals. The Fed’s dovish posture continues to weigh on the dollar and buoy gold prices, especially as geopolitical risks deepen with new attacks on Israeli diplomats and persistent hostilities in Ukraine.
In this environment, oil is more than a commodity it’s a geopolitical barometer. Whether prices climb or collapse may depend less on fundamentals and more on the high-stakes negotiations shaping the world order.
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