UBS has revised its short- and medium-term oil price forecasts upward, signaling a more bullish stance on Brent crude as market indicators point to tighter physical balances and supply vulnerabilities persist.
In a client note, strategist Giovanni Staunovo set a new year-end target for Brent at $95 a barrel, up from the bank's prior $85 prediction. The bank's projection for mid-2027 remains at $85 a barrel. UBS also increased its March 2027 forecast to $90 a barrel from $80, while keeping its September 2027 estimate at $80. UBS retains an assumed West Texas Intermediate discount of $4 relative to Brent.
Recent market moves have already pushed Brent higher, with the benchmark climbing above $100 a barrel on the day the note was released. UBS highlighted inventory measures as a driver of the tighter market signal.
Staunovo pointed to a substantial draw in oil-on-water stocks, which have fallen by 150 million barrels over the past two months. He attributed this decline to lower global crude exports in August from a number of key exporters, specifically the Middle East as well as Russia, Mexico, the North Sea and Brazil.
Beyond the physical supply indicators, the strategist cited events and rhetoric that keep upside risks in place, including strikes on Saudi energy facilities and statements from Iranian officials. "In the near term, we believe risks to prices remain skewed to the upside," he wrote.
UBS noted that its updated forecasts sit above prevailing market prices, in part because the futures curve slopes downward. That structure leaves the bank's targets higher than market-implied forward prices despite spot levels already exceeding the bank's year-end figure.
"We therefore retain a moderately constructive outlook for crude oil," Staunovo wrote, while also warning that uncertainty remains elevated. He specifically pointed to the ongoing Middle East conflict and uncertainty around the timing and pace of recovery in Gulf production and demand as important sources of that elevated uncertainty.
Context and implications
The adjustments reflect UBS's read of a market that is increasingly undersupplied in the near term, driven by both physical export reductions and heightened geopolitical risk. The bank's assumptions about the WTI-Brent spread and its revised quarterly targets form the basis for its constructive stance on crude prices for the coming quarters.