UBS Sees $110 Brent by Year-End as Gulf Flows Stay Below Prewar Levels

UBS has raised its Brent forecast for the second time this month and now expects crude to trade at $110 a barrel at the end of 2026, up from 100. The Swiss bank also lifted its 2027 curve by $5 a barrel at each point, to $95 for March, $90 for June and $85 for September.“Uncertainty around our forecasts remains elevated, reflecting the unpredictable nature of the Middle East conflict, and the pace of recovery in Gulf production and global oil demand,” UBS said in a note.On October 6, UBS raised its fourth-quarter forecast to $100 from about $80 and its 2026 average to 491.57 from 483.74.UBS says Middle Eastern crude loadings have recovered substantially from the severe disruption earlier this year, but Gulf crude and condensate port loadings remain below prewar levels. October brought a record number of reported attacks on vessels in and around the Strait of Hormuz, raising insurance and freight costs. Very large crude carrier rates from the Middle East to China have climbed to $30-40 a barrel, against 1-3 over the past decade. Global inventories have fallen sharply, and pledged strategic reserve releases are largely complete. “An undersupplied market could push commercial stocks lower and should sustain oil prices,” UBS said.Brent traded at $115.30 a barrel on Wednesday at 10:22 a.m. ET, up 1.25%, and WTI at $101.90, up 2%, after the Houthis claimed a ballistic missile strike on Saudi Aramco’s 550,000-barrel-per-day Ras Tanura refinery. Saudi authorities have not confirmed a direct hit. The Saudi-led coalition said it intercepted a Houthi missile aimed at Taif.Washington has told several Gulf states to prepare for a possible renewed U.S. military campaign against Iran after the November 3 midterm elections, the Wall Street Journal reported. Qatari mediators have presented Tehran with a new draft deal to end the war, and Iran is expected to respond by the end of the week. Traders are bracing for a new escalation once the vote is over.The World Bank on Wednesday forecast a 23% rise in global commodity prices this year, citing energy prices and shipping disruptions during the Middle East war, grain shipment problems in the Black Sea and demand for safe-haven assets such as gold. A year ago, the bank projected that commodity prices would fall to a six-year low in 2026 on an expanding oil glut.By Charles Kennedy for Oilprice.comMore Top Reads From Oilprice.comInvestors From 119 Countries Pile Into Dangote’s Record Refinery IPOU.S. Lawmakers Warn Banks Against Trump's Russian Diesel DealIran Eyes $130 Oil While at Least 50 Tankers Sit Stuck in the Gulf