Oil markets have experienced a $15 drop in the past three months, stirring doubts about OPEC+’s ability to maintain or enforce set cuts. According to Max Layton, Citi’s global head of commodities research, this volatility could result in a deterioration of mature industrial economy growth in 2024.

Layton expressed during a CNBC interview, “We think there’s a relatively small risk premium in the market for the Middle East supply risks. Overall, the market is correctly priced for the first quarter.”

Citi anticipates oil price targets for the first, second, third, and fourth quarters to be $76, $69, $70, and $68 respectively for WTI (CL1:COM) and $80, $73, $74, and $72 respectively for Ice Brent (CO1:COM).

Layton also revealed his bullish stance on precious metals and a neutral to bearish outlook on energy.

He further added, “There’s obviously a material non-zero risk that the situation in the Middle East gets worse and causes either outright impacts supply or drives a higher risk premium, but I think it’s difficult to call whether or not the market pays for that in the face of what is a pretty sizable second quarter surplus, absent OPEC+ rolling forward those cuts through the second quarter.”

With a surplus of more than a million barrels for the second quarter looming over the market along with spare capacity, the possibility of cuts extending throughout the year remains a “really plausible scenario,” he said.

“It’s within OPEC+ graphs to balance this market next year and to protect these kinds of prices — around $70-75 for the WTI and Brent,” he explained. “If you wait, you give time for supply disruptions to occur. All the time you’re waiting you’re allowing your out-of-the-money supply disruption auction to come into the money. That would then allow them to ramp back up into that supply weakness.”