Citi Strategy: 'Tactical Bull' Call on Oil & Silver, Warning on Copper Peak

In a sweeping outlook for the commodities sector, Citi Research has outlined a “tactical bullish” stance on energy and precious metals, driven by escalating geopolitical tensions and supply-side constraints. However, the bank warns that the rally in industrial metals like copper may be nearing a premature peak.

Energy: The Geopolitical Premium

Citi analysts argue that the crude oil market is currently trading on a “geopolitical premium,” driven by risks involving Iran, Russia-Ukraine, and potential disruptions in Libya.

• Targets: The bank sets a tactical upside target for Brent Crude at $70 per barrel.
• Political Context: Supporting this risk-on view for oil, recent legislative moves in the US Senate—blocking opposition to military action in Venezuela—highlight the persistent geopolitical friction points that could threaten supply chains.
• Long-Term Bear: Despite the short-term rally, Citi warns of a structural surplus by 2026, exacerbated by potential US policy shifts favoring lower prices under a Trump administration.

Precious Metals: Silver to Outshine Gold?

The report projects a dramatic repricing in precious metals leading into 2026. While maintaining a bullish view on Gold (with a long-term theoretical ceiling of $5,000), the bank highlights Silver as the superior trade, forecasting a potential surge toward $100 per ounce.

• Caveat: TD Securities counters this optimism with a note of caution, warning that Gold's “two-way risk” is increasing significantly as volatility spikes, suggesting the easy “debasement trade” may be becoming overcrowded.

Industrial Metals: Aluminum vs. Copper

A sharp divergence is emerging in base metals: