Citi has raised its third-quarter Brent crude forecast to $80 per barrel, up from $75, as the US-Iran war drags on and repeated attempts at a deal have failed to restore normal oil flows through the Strait of Hormuz, according to Reuters.

The Strait of Hormuz is one of the world's most critical oil transit chokepoints, normally handling roughly a fifth of global daily petroleum consumption. A prolonged disruption to flows through the waterway therefore has outsized implications for global supply, far beyond the volumes directly tied to Iranian exports.

The five-month war has lasted longer than Citi anticipated, keeping more geopolitical risk priced into crude than its earlier forecasts assumed. The bank still expects the conflict to eventually be resolved, but acknowledged that the delay in reaching a settlement warranted a higher near-term price assumption.

Citi left its fourth-quarter Brent forecast unchanged at $70 per barrel and continues to see the benchmark averaging $65 in 2027. Analysts at the bank said their longer-term view of the conflict's eventual outcome remains unchanged despite the upward revision to the Q3 number.

The unchanged $70 fourth-quarter forecast now depends on largely the same assumption that underpinned Citi's July call: that more barrels will manage to get through Hormuz as the situation progresses. That assumption faces growing pressure amid reports of missile strikes on tankers in the strait's southern corridor and Iran's insistence that the waterway will remain closed until its conditions are met in full.

Iran's demands cover sanctions relief, war compensation, and a complete US withdrawal from the region. Tehran has continued to characterize the strait as a theatre of war, and repeated attempts at a negotiated settlement have failed to restore normal flows. The stalemated demands also mean that any diplomatic breakthrough would require movement on issues that both sides have so far treated as non-negotiable.

Citi's relatively modest $5 upward revision to the Q3 number suggests the bank still views the bulk of current flows through Hormuz's southern corridor as broadly sustainable, rather than seeing the conflict as being on the verge of a fuller disruption to global supply. The revision effectively concedes that the bank's earlier timeline for a Hormuz resolution was too optimistic, without abandoning the resolution thesis altogether.

However, if a Hormuz deal continues to slip into the fourth quarter, Citi's $70 forecast for that period becomes the more vulnerable of its projections. A further upward revision to the Q4 number would signal that the market is pricing in a longer standoff rather than a near-term resolution. Key indicators to watch include the frequency of reported incidents in the southern corridor, any shifts in Iran's stated conditions, and whether major oil importers begin drawing more heavily on strategic reserves.

The forecast update leaves Citi's overall view intact: oil prices should gradually normalize as the conflict is resolved and Hormuz traffic returns to something closer to pre-war levels. The timeline for that outcome, however, continues to be pushed further out than the bank originally anticipated.