Investing.com -- Oil prices could be headed for a volatile stretch in the $50 to $70 per barrel range, with geopolitical developments—especially a potential U.S.-Iran nuclear deal—serving as a key driver, according to Citi.

“As Brent crude has fallen from $75 right before ‘Liberation Day’ to >$60 currently, oil markets may now be facing a $50-70 range,” Citi wrote.

The bank emphasized that “a U.S.-Iran deal and easing sanctions could see Brent move lower toward $50,” while “no deal and even escalatory action… could see prices move back to $70+.”

Citi said it sees a “60%:40% skew toward an eventual deal.”

The recent decline in Brent has come amid a surge in supply, as OPEC+ added barrels back to the market “at three times faster than the expected rate,” according to Citi.

While the group’s formal quota hike was supposed to be around 137,000 barrels per day, actual additions were closer to 411,000 barrels.

At the same time, “Saudi Arabia raised its June official selling prices (OSPs),” which Citi noted as “somewhat contradictory” to its production increase.

Compounding the pressure, U.S. tariffs and recession concerns have weighed on demand sentiment, according to Citi.

They said Brent’s sharp fall from its April high of $75 has already begun to affect supply.

Citi highlighted “U.S. shale producers signaling the beginning of a pullback in activity,” and continued declines in Mexican output.

“Lower oil prices for longer could set up for a supply pullback” among higher-cost producers like U.S. shale and Canadian oil sands, Citi added, though a price recovery may only come with “revitalized demand from any improvement in the macro outlook” later in 2025 or 2026.