- Citi expects U.S.-Iran deadlock to persist post-summit.
- Strait of Hormuz disruptions seen intermittent for 4-8 weeks.
- Bank maintains bullish oil outlook on supply pressures.
President Donald Trump's meeting with Chinese leader Xi Jinping is unlikely to resolve the U.S.-Iran standoff, according to Citi Research. The bank forecasts that shipping disruptions through the Strait of Hormuz will continue intermittently for the next four to eight weeks, cautioning that Iran may extend tensions to gain leverage and revenue.
Citi's analysts wrote in a note that the meeting, while significant for broader U.S.-China relations, will not alter the underlying dynamics driving the conflict. Iran's strategy likely involves maintaining pressure through periodic disruptions, using the chokepoint as a bargaining chip.
Despite the diplomatic uncertainty, Citi reaffirmed its bullish oil price outlook, arguing that supply constraints remain a key factor underpinning prices. The bank noted that even partial disruptions in the strait—through which about a fifth of global oil passes—are enough to keep risk premiums elevated.
"Oil markets are pricing in a lasting risk premium," the note said, citing reports of vessels transiting with limited visibility and intermittent transponder usage. The situation remains fluid, with the intensity of disruptions fluctuating.
Efforts to reach the White House for comment were not immediately successful. The Chinese Foreign Ministry did not respond to a request for comment.
Editor's note: This article has been updated to clarify Citi's timeframe on disruptions.