UBS revised its oil price outlook higher on Thursday, moving its September projections up by $10 per barrel. The bank now expects Brent crude to trade around $105 per barrel and U.S. West Texas Intermediate (WTI) to be near $97 for September.
Beyond the September update, UBS also raised its forecasts for December and the following March by $5 per barrel. The bank framed these changes within a backdrop of elevated near-term upside risk to prices tied to persistent supply disruption.
UBS warned that if the current supply interruption continues, the market could see a sharp overshoot in prices that would be strong enough to provoke meaningful demand destruction. In that stress scenario, UBS said Brent could trade above $150 per barrel. The bank added that scarcity fears under such conditions could prompt hoarding behavior and further amplify price moves.
The bank highlighted recent developments in the Strait of Hormuz, noting that Iran has taken steps to entrench its control of the waterway, which it described as remaining mostly closed. UBS linked these developments to the broader supply picture.
On volumes, UBS estimated that overall oil production losses likely reached 650 million barrels across March and April. The bank said those losses are on track to exceed 1 billion barrels by the end of May if the disruption continues at current rates.
These adjustments and assessments reflect UBS's view that the immediate price trajectory is skewed toward higher levels while acknowledging the risk that a severe price spike could reduce consumption. Market participants and economic actors tied to oil markets will be watching whether the supply situation eases or deteriorates further.
Context for market participants
- Energy producers and commodity traders will need to factor in the upward-revised short-term price assumptions.
- Downstream users and sectors sensitive to fuel costs will face uncertainty if prices move toward the levels UBS outlined.
- Shipping and chokepoint security considerations are relevant given the reported status of the Strait of Hormuz.