Trump’s Shifting Stance Deadlocks US-Iran Talks, Citi Maintains $120 Brent Target

The core factor influencing recent oil price trends remains the recurring volatility in U.S.-Iran relations.

Recent developments in the U.S.-Iran situation show that the U.S. and Iran have once again exchanged fire in the Gulf; U.S. Central Command also stated that it struck two Iranian oil tankers, while Iran accused the U.S. of violating ceasefire arrangements.

Meanwhile, Trump stated that the ceasefire remains in effect while simultaneously expressing hope for a swift response from Iran; such inconsistent rhetoric makes it difficult for the market to form stable expectations.

Latest news shows that on May 8, Trump indicated he might reinstate the "Freedom Plan" against Iran, with an "upgraded version" if negotiations stall. This has exacerbated tensions in the Strait of Hormuz, a critical global energy corridor where shipping safety directly impacts crude oil market sentiment.

For the crude market, the true risk is not just the conflict itself, but whether passage through the Strait of Hormuz remains continuously disrupted. The market has seen oil prices spike on news of shipping restrictions, escort resumptions, or new airstrikes, only to give back gains on peace talk signals. Over the past week, Brent crude briefly dipped below $100 but rebounded after the conflict escalated, showing that the geopolitical premium is not yet fully priced in.

Citi maintained its 3-month price target for Brent at $120, not because it expects oil prices to surge in a one-way trajectory, but because it believes the near-term market has significantly underestimated the duration of the risk.

Citi stated that although inventory drawdowns, U.S. Strategic Petroleum Reserve releases, weak Chinese imports, and moderate overall demand have partially offset the shock, Brent could still trend higher if U.S.-Iran negotiations remain fraught. Citi's base case is that the Hormuz disruption will gradually ease by the end of May, but if the negotiations remain deadlocked, there is room for prices to move even higher.

This assessment is largely consistent with those of other institutions. Barclays has already raised its 2026 Brent forecast to $100 and explicitly noted that if the Hormuz disruption persists until the end of May, prices could potentially edge back toward $110.

Recent market price action suggests that the crude oil market has entered a distinct event-driven trading phase.

On May 6, the market pulled back sharply on news that the U.S. and Iran were close to a preliminary peace deal, with Brent crude briefly dipping below $100; on May 7, oil prices surged again as tensions escalated. Despite closing the week with a significant decline of 8.11%, this does not signal that risks have dissipated; rather, it indicates that traders are continuously recalibrating geopolitical premiums.

Brent crude oil price daily chart. Source: TradingView

From a technical standpoint, following this week's sharp decline, market sentiment is likely to remain bearish at next week's open, potentially leading to a further test of the $95.34 support level. Should this level be breached, the price may move lower to test the $92.61 support level.

At present, a single comment from Trump, a minor skirmish in the strait, or a new negotiation proposal could shift market pricing within a short timeframe.

Should tensions between the U.S. and Iran escalate again, oil prices are expected to continue their ascent. The primary objective would likely be to fill the May 6 price gap in the $108.71-$106.06 range, followed by the previous high of $113.62. A break above this level would further open the upside toward $121.36.

Conversely, if positive progress is made in U.S.-Iran negotiations, oil prices will likely move lower to test the $92.61 support level, with potential for a deeper pullback toward the $84.19 support mark.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.