UBS raised its Brent crude price forecasts for the 2026 and 2027 stating that Middle East flows were disrupted more than expected following the breakdown of the June US-Iran Memorandum of Understanding and added that the recovery remains fragile given the ongoing attacks.
* “While Hormuz flows have materially recovered in recent weeks, this improvement has come at great expense and remains fragile given ongoing Iranian attacks,” UBS said in the note dated Monday.
* The bank forecasts Brent crude at $100 per barrel in Q4 2026, up from about $80 per barrel previously, and $91.57 as the 2026 average compared to a previous forecast of $83.74 for the same period.
* “We assume a gradual normalisation of regional oil flows through the first half of 2027 on the basis of a similar arrangement to the June MoU by the end of the year but factor in a higher near-term risk premium as the path to normalisation remains uncertain,” the bank said.
* New attacks and disruptions to flows could send prices to $120+/bbl, the bank said, adding that oil prices might fall more rapidly than anticipated if a US-Iran agreement is reached and flows ramp up more quickly.
* Gulf oil exporters topped pre-war levels for about half of September, shipping data showed on Monday, although attacks on tankers and logistical constraints cloud the outlook for sustained higher flows.
* Oil prices fell on Tuesday as resilient Middle Eastern crude exports and a G7 emergency stockpile release eased supply concerns, though lingering security risks in the region capped further losses.
* Brent crude futures were down 1.8% at $98.48 a barrel at around 1013 GMT, while US West Texas Intermediate crude futures fell 1.9% to $87.70 a barrel.
(Reporting by Sukanya Mitra in Bengaluru; Editing by Louise Heavens)