Catenaa, February 17, 2026 – Oil prices could decline if former President Donald Trump advances new geopolitical peace agreements, according to Citi analysts. The bank argues that crude markets still include a sizeable geopolitical risk premium.
Brent crude has traded near multi-month highs in recent sessions. Prices remain sensitive to tensions in the Middle East and Eastern Europe. Roughly one-third of global seaborne oil passes through the Strait of Hormuz. Any threat to that route lifts futures quickly.
Citi estimates that geopolitical risk can add $5 to $10 per barrel during peak tensions. If credible ceasefires or negotiated settlements emerge, that premium could unwind. This can push Brent and WTI prices lower quickly. The adjustment often happens before physical production changes.
The mechanism is financial rather than structural. Hedge funds and commodity traders build long positions during conflict periods. When risk perceptions ease, those positions are reduced. That creates downside pressure.
However, supply fundamentals still matter. OPEC+ continues to manage output through coordinated quotas. Saudi Arabia has maintained voluntary production cuts in recent years to support prices. A diplomatic breakthrough would not automatically increase barrels.
Demand dynamics are equally important. China accounts for about 15% of global oil consumption. US demand remains resilient despite higher interest rates. Slower global growth could amplify any price decline.
Citi also notes the US Strategic Petroleum Reserve as a swing factor. Refill activity tightens supply, while releases cap rallies. Policy direction will shape medium-term balances.
Energy equities may respond differently. Integrated majors hedge production and benefit from refining margins. Pure upstream producers are more exposed to spot price swings.
In short, peace efforts could reduce speculative premiums embedded in oil. Yet structural supply discipline and global demand trends will determine the depth of any decline.
Investors will watch diplomatic signals closely. Credibility and timing will decide whether crude sees a temporary dip or sustained repricing.
