In its latest report, UBS has raised its forecast for Brent oil prices for the second time this month, expecting the price to reach $110 per barrel by the end of 2026. The bank's previous forecast was $100. Additionally, UBS has increased its forecasts for 2027 by $5 per barrel, adjusting prices to $95 for March, $90 for June, and $85 for September.
Challenges of Uncertainty in Forecasts
UBS stated in its report that uncertainty in forecasts remains high due to the unclear situation in Middle Eastern conflicts and the recovery trends in oil production from Gulf countries and global oil demand. The bank also noted a significant increase in crude oil loadings from the Middle East but emphasized that loadings of crude oil and condensates from Gulf ports are still below pre-war levels.
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Factors Influencing Oil Prices
In October, the number of recorded attacks on ships around the Strait of Hormuz reached a record high, increasing insurance and transportation costs. Freight rates for very large crude carriers from the Middle East to China have risen to $30 to $40 per barrel, a significant change compared to $1 to $3 over the past decade. Global inventories have sharply declined, and the release of strategic reserves has largely come to an end. UBS believes that a supply shortage market could reduce commercial inventories and keep oil prices stable.
On Wednesday, Brent oil prices reached $115.30 per barrel, while West Texas Intermediate (WTI) rose to $101.90. This price increase followed claims by the Houthis of a missile attack on the Ras Tanura refinery, which has a capacity of 550,000 barrels per day and is owned by Saudi Aramco. Saudi officials have yet to confirm that this attack occurred directly.
Furthermore, the World Bank predicted on Wednesday that global commodity prices would increase by 23% this year, linking this to rising energy prices and transportation disruptions caused by the war in the Middle East.
Read more: Oil prices reached $115 after the attack on the Saudi refinery · Oil prices rise after the attack on the Saudi refinery
