US and Israeli actions against Iran are likely to remain limited in the near term, as Washington seeks to avoid a wider escalation while maintaining pressure on Tehran over its nuclear programme, according to Citigroup.
In a note published on Thursday, Citi said it expects smaller-scale measures, including limited US military action and possible oil tanker seizures. Such steps are likely to keep a risk premium built into oil prices, rather than trigger a sharp market shock, News.Az reports, citing Al Jazeera.
The bank added that ongoing concerns over potential disruptions in the Strait of Hormuz — a vital route for global energy supplies — would continue to support elevated oil prices.
Citi assigned a 70% probability to its base-case scenario, citing US sensitivity to higher energy costs, President Donald Trump’s preference to avoid a full-scale conflict, and internal pressures within Iran that could leave room for a negotiated outcome.
The bank said it does not expect a major Iranian response, pointing to economic strain and domestic unrest. However, it also estimated a 30% chance of heightened but still limited conflict that could disrupt oil flows.