Get Ready for Crude Oil Prices to Hit $120 a Barrel, Says Citigroup (C)

U.S. bank Citigroup (C) says Brent crude oil, the international standard, is likely to reach $120 a barrel in the coming weeks as the situation in the Middle East remains unresolved.Claim 55% Off TipRanksUnlock hedge fund-level data and powerful investing tools for smarter, sharper decisions Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks Brent crude oil is currently trading at $108.59 but has been as high as $110 in recent days. Citigroup says that oil prices can be expected to remain elevated amid a prolonged supply disruption due to the closure of the Strait of Hormuz near Iran. The Wall Street lender adds that its worst-case scenario is for Brent crude oil prices to reach $150 per barrel this summer. That situation assumes the Strait of Hormuz will not fully re-open until late in the year's third quarter. The Future Is Hard to Predict Looking out further, Citigroup says that its 2027 outlook for oil prices is difficult to predict because its central thesis sees Brent prices ranging from $80 to $90 a barrel, assuming Iran maintains control of the Strait of Hormuz, and also balances oil exports with demand growth expectations. Citigroup estimates that global oil inventories will be drawn down by about one billion barrels this year as the world waits for shipping traffic to normalize in the Strait of Hormuz, where 20% of crude flows. The bank said energy demand is likely to weaken somewhat next year as the situation in the Middle East improves. Comparing Oil Stocks The chart below compares the stocks of three global oil majors, Chevron (CVX), Occidental Petroleum (OXY), and Shell (SHEL). As one can see, Chevron is the highest rated among the three stocks with a consensus Strong Buy rating.