UBS Revises Oil Price Forecasts Downward Amid Rising Supply Through Strait of Hormuz

Deep News10:40

Increasing energy shipments transiting the Strait of Hormuz have prompted UBS to revise its oil price forecasts for 2026-2027 lower.

The bank now expects the average price of Brent crude this year to be $84 per barrel, a reduction of $9 per barrel from its previous forecast.

The firm has also lowered its 2027 price projection from $85 per barrel to $75.

UBS stated that a reduction in geopolitical risk and a faster-than-expected rebound in supply have led to price declines exceeding its initial expectations.

The bank anticipates a modest price recovery to around $80 per barrel in the second half of this year, as floating storage in the Gulf region normalizes and demand picks up.

UBS also believes risk premiums could remain elevated, as the path to normalization may still be uneven.

The bank noted that the need to replenish inventories should continue to provide price support through the end of 2027, although the scale of required stock rebuilding is smaller than its prior estimate of 1 billion barrels.

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