Citigroup Cuts Brent Crude Target 20% on Tariff Fears, Commodities Plunge
1min read Citigroup has issued a stark warning regarding the dual bearish factors affecting commodities, leading to a significant reduction in the target price for Brent crude oil to $60 per barrel. This adjustment comes in response to the latest tariff policies, which have prompted the bank to revise its expectations for commodity prices over the next three months. The target price for copper has been lowered to $8,000 per metric ton, while the target price for aluminum has been reduced to $2,200 per metric ton. These changes reflect the bank's assessment of the current market conditions and the potential impact of the new tariff policies on commodity prices.
Ask Aime: What is the impact of Citigroup's warning on commodities and tariff policies on the target prices for Brent crude oil, copper, and aluminum?
The reduction in the target price for Brent crude oil is particularly notable, as it indicates a significant shift in the bank's outlook for the oil market. The dual bearish factors cited by citigroup include the potential for reduced demand due to economic uncertainty and the possibility of increased supply as a result of the new tariff policies. These factors, combined with the bank's revised expectations for commodity prices, suggest that investors may need to adjust their portfolios to account for the potential impact on their investments.
In the context of escalating trade tensions, the U.S. President announced a 10% base tariff on all imported goods and higher tax rates on several countries, including major trading partners. In response, China implemented retaliatory measures, imposing a 34% additional tariff on all U.S. goods starting from April 10. This tit-for-tat approach has led to a dramatic market reaction, with international oil prices plummeting nearly 4% and London base metals continuing their downward trend. Concerns about economic recession have intensified as a result.
Citigroup's report highlights that the actual impact of these tariffs will be doubly bearish. The supply tightness that has characterized the commodity market over the past few months is expected to reverse completely. Previous corporate behaviors of preemptive purchasing and stockpiling are likely to see a comprehensive reversal. Any short-term rebounds triggered by trade negotiation news or the delay in tariff implementation on April 9 are expected to be met with selling at higher levels. The report also notes that U.S. natural gas and gold may perform relatively better in the short term.
