Citi's base case sees Brent prices heading towards low-$60s/bbl by end-year

Aug 7 (Reuters) - Analysts at Citibank said on Thursday their base case remains for Brent oil prices to head toward the low $60s per barrel by the end of this year, citing softening markets.

Brent crude futures LCOc1 were down 36 cents at $66.53 a barrel at 1:46 p.m. EDT on Wednesday. U.S. West Texas Intermediate crude CLc1 fell 38 cents to $63.97.

The bank noted that as geopolitical talks unfold at a slower pace and despite a moderate impact on Russian supply - estimated at around 500,000 barrels per day - as India scales back purchases, China is stepping in to absorb more discounted Russian crude. It added U.S. enforcement appetite may remain limited due to concerns over keeping global oil prices in check.

U.S. President Donald Trump has threatened new sanctions against Russia and countries that buy its exports from Friday unless Putin agrees to end the 3-1/2-year Ukraine conflict.

Trump on Wednesday imposed an additional 25% tariff on Indian goods, citing New Delhi's continued imports of Russian oil in a move that sharply escalated tensions between the two nations after trade talks hit a deadlock. India has pledged not to be cowed by Trump's hardline bargaining position.

Citi said that a potential bear case for prices could materialise if a fast and comprehensive deal is done.

While this may not boost supply much immediately, it could remove a key geopolitical risk from crude oil and diesel markets that has been present since 2022, gradually redirecting Russian oil flows back to shorter trade routes, which could see oil prices decline to the $50s, the bank said.

This would "put the ball back in OPEC+’s court" on how to respond to lower oil prices, Citi said.

OPEC+ agreed earlier this week to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated output hikes to regain market share.

Citi also said that a bull case scenario could arise for Brent prices, if more than 1 million to 1.5 million barrels per day (bpd) of Russian supply is affected, or if India were to back out of its around 1.75 million bpd of oil imports from Russia, with China absorbing some of this.