UBS raises Brent crude price forecasts amid Middle East supply disruptions

UBS has revised its Brent crude price forecasts upward for 2026 and 2027, citing prolonged supply disruptions in the Middle East. The bank now expects Brent crude to reach $100 per barrel in the fourth quarter of 2026, up from its previous estimate of around $80. The average price for 2026 has also been adjusted to $91.57, compared to the earlier forecast of $83.74.

UBS attributes this shift to the breakdown of the June US-Iran Memorandum of Understanding, which has led to more significant disruptions in Middle East oil flows than anticipated. While there has been a recent recovery in flows through the Strait of Hormuz, UBS notes that this improvement is fragile due to ongoing Iranian attacks. The bank assumes a gradual normalization of regional oil flows by the first half of 2027, but cautions that near-term risks remain high due to the uncertain path to stabilization.

UBS warns that new attacks or disruptions could push prices above $120 per barrel. Conversely, if a US-Iran agreement is reached and oil flows increase more rapidly, prices might fall faster than expected. Shipping data indicates that Gulf oil exporters have briefly surpassed pre-war levels, but security risks and logistical constraints continue to cloud the outlook for sustained higher flows.

On Tuesday, oil prices fell slightly as resilient Middle Eastern crude exports and a G7 emergency stockpile release eased supply concerns. Brent crude futures dropped 1.8% to $98.48 per barrel, while US West Texas Intermediate crude futures fell 1.9% to $87.70 per barrel. Lingering security risks in the region, however, capped further losses.