Oil will fall to the mid $80s in a best-case scenario, says UBS

MW Oil will fall to the mid $80s in a best-case scenario, says UBS

By Nora Redmond

Oil prices rose by about 80% in the first two to three months of the Gulf War in 1990, compared with almost 100% in today's episode.

Out of all the oil-supply shocks of the past 50 years, the current one, which began after the U.S. and Israel first started striking Iran on Feb. 28, resembles the Gulf War in 1990-91 the most, according to analysts at UBS, led by Bhanu Baweja.

The group said that, in a best-case scenario, oil prices will stabilize in the mid $80-per-barrel range.

Following Iraq's invasion of Kuwait in the summer of 1990, prices surged by about 80% in two to three months as global supplies were limited by 4 to 5 million barrels a day - or 6% to 7% of supply, they wrote.

In today's shock, prices increased by almost 100% between two and three months, representing 9 to 10 million barrels a day, and around 10% of global supply, the analysts wrote, estimating that inventories will reach their lowest level by the end of this month.

Ten weeks after the beginning of the war, oil prices surged higher than in the first 10 weeks of any other conflict in the past 46 years.

Unless the Strait of Hormuz fully reopens, shortages in the physical supply of oil could result in a sharp spike in energy costs, they said.

"Even if the strait reopens, energy security concerns and inventory rebuilding should keep oil prices structurally higher, with a best case stabilisation in the mid $80s per barrel versus mid $60s pre conflict," the analysts noted.

A U.S. delegation, led by Vice President J.D. Vance, is due to leave Washington on Tuesday for another round of negotiations in Islamabad, Pakistan, on Wednesday. It's still uncertain if Iran will also send a team before its cease-fire agreement with the U.S. expires on Wednesday evening.

If a truce isn't made, it's likely the strait will remain closed, meaning further disruptions to the supply of oil, with Mohammad-Bagher Ghalibaf, speaker of Iran's Parliament, writing in a post on X that in the past two weeks the Islamic Republic has "prepared to reveal new cards on the battlefield."

-Nora Redmond

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April 21, 2026 06:50 ET (10:50 GMT)

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