On Thursday, Brent crude futures increased by over 1.81% to $96 per barrel, while West Texas Intermediate futures rose 1.86% to $90.33 per barrel. The U.S. military conducted strikes against a military site in Iran that was perceived as a threat to U.S. troops and commercial shipping in the Strait of Hormuz. This escalation has heightened fears of disruptions in a key oil transit route.
Despite these tensions, Citi noted that oil markets were stabilizing as investors began to dismiss extreme supply disruption scenarios, especially with indications that the U.S. and Iran might be edging closer to a diplomatic agreement.
However, Citi warned that the uncertainty surrounding the timing of any potential deal is causing central banks to remain vigilant, as they consider tighter monetary policies to combat inflation driven by rising energy prices.
The bank highlighted that the ongoing increase in crude prices is contributing to broader inflationary pressures, which could lead to a more hawkish stance from some central banks