Oil Prices Are Moving Like Crazy, Citi's Layton Says
Speakers
Max Layton
— Global Head of Commodities Research, Citi
Summary
Max Layton of Citigroup discusses recent oil price volatility tied to Iran deal uncertainty. He notes physical oil inventories have been drawn down after a large build, and if the draw continues into Q3, Brent could spike to $150-$180. The Iran regime's resilience reduces the likelihood of a quick deal, keeping prices volatile.
- Oil prices have been highly volatile due to conflicting signals about a potential Iran deal.
- Physical oil barrels are not much higher than futures, indicating current ample supply.
- Global oil inventories built up by 700-800 million barrels are now being drawn down.
- If inventory draws continue into Q3, Brent could reach $150-$180 per barrel.
- The Iran regime's ability to withstand sanctions makes a quick deal unlikely.
- Any sign of a deal would lower Layton's oil price forecast.
- The physical impact of a deal would take months to materialize.
Ideas
Brent could spike to $150-$180.
Brent crude oil could spike to $150-$180 per barrel by the third quarter of 2025 if inventories continue to draw down to low levels, driven by the ongoing Iran sanctions and the regime's ability to withstand a blockade, making a quick deal unlikely. The physical market is not yet tight but the drawdown of previously built inventories could create a convex price response later this year.
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Speakers: Max Layton · Tickers: BNO