Citibank: If the blockade in the Strait of Hormuz continues for another month, oil prices will rise to $110.

Citigroup Group said that if the shipping in the Strait of Hormuz remains blocked for another month, oil prices could rise to $110 per barrel. The institution pointed out that if this critical waterway remains disrupted for four weeks, the estimated global crude oil and refined oil inventory loss caused by the US-Iran war is expected to rise to about 1.3 billion barrels. Even if the ceasefire extension agreement is reached by all parties this week, shipping in the strait and crude oil production are expected to gradually resume in May, with a global total inventory reduction of approximately 900 million barrels expected - including the already lost 500 million barrels, and an additional estimated loss of approximately 400 million barrels due to delayed production and conflict damage. Citigroup further warned that if the interruption in the Strait of Hormuz continues for two months, global supply will be reduced by approximately 1.7 billion barrels, and oil prices could be pushed up to $130 per barrel. However, even if the conflict ends this week, Citigroup predicts that by the end of June, global crude oil and fuel inventories will reach their lowest level in eight years. The bank stated that assuming the market quickly returns to a daily supply surplus of 1 million barrels after the conflict, rebuilding inventories could also take more than two years. Citigroup predicts that a preliminary agreement between Iran and the US will be signed, or the ceasefire period will be extended this week, possibly evolving into a more comprehensive agreement. "That being said, we are still prepared to switch to scenarios of longer-term interruptions if negotiations are obstructed," Citigroup analysts led by Max Layton wrote in the report. Oil prices in the New York market rose by 5% on Monday, surpassing $95 per barrel. Prior to this, US President Trump stated that he is "highly unlikely" to extend the ceasefire and said that the Strait of Hormuz will remain blocked until an agreement is reached. The ongoing energy crisis has triggered unprecedented supply shocks, exacerbated inflationary pressures, and hindered global economic growth. Citigroup suggests that rolling over near-month crude oil long positions is an effective strategy to hedge against rising oil prices. In early April, following a two-week ceasefire agreement between the US and Iran, analysts including Dean Struven pointed out in a report: "The situation is still full of variables." They also mentioned US Vice President Pence's statement about the fragility of the ceasefire agreement. "We continue to believe that the risks in our price forecasts lean to the upside." Goldman Sachs stated that in its "adverse scenario", including a month delay in reopening, the average price of Brent crude oil in the second half of the year is expected to exceed $100 per barrel. Another scenario based on a longer closure and partial regional production loss forecasts even higher results: an average price of $120 per barrel for Brent crude oil in the third quarter and $115 in the fourth quarter. The global oil market continues to closely monitor the Strait of Hormuz. Since the US-Iran airstrikes in February, the strait has been mostly closed to shipping. After briefly reopened, the situation has rapidly turned again, re-blocking the Strait of Hormuz.