UBS Predicts Brent Crude Price To Hit $110 In Revised Forecast

Swiss Bank, UBS has said that Brent Crude could hit its year-end forecast of $110 per barrel from $100.

The bank cited continued Middle East supply disruptions, rising transportation costs, and uncertainty surrounding the recovery of global petroleum inventories to arrive at its prediction.

The revised outlook suggests oil prices could remain elevated even as production and export activity gradually improve.

The Swiss bank also increased its Brent forecasts for 2027, projecting $95 per barrel in March, $90 in June, and $85 in September. Each estimate represents a $5 increase from its previous projection.

The revisions reflect a petroleum market in which supply availability increasingly depends on transportation security and the cost of delivering crude to international customers.

According to UBS, Middle Eastern crude shipments have recovered substantially from disruptions earlier this year, but Gulf crude and condensate loadings remain below levels recorded before the conflict involving Iran.

Combined oil flows through the Strait of Hormuz and alternative pipelines approached 18.8 million barrels per day during early October, compared with approximately 19.9 million barrels per day before the conflict.

However, the recovery in physical shipments has not eliminated transportation constraints.

At least 30 attacks on commercial vessels were reported in and around the Strait of Hormuz during October, the highest monthly total recorded. These incidents have increased marine insurance expenses, complicated tanker scheduling, and reduced effective shipping capacity.

UBS estimates that freight costs for very large crude carriers transporting oil from the Middle East to China have reached approximately $30 to $40 per barrel, compared with a historical range of $1 to $3.

Higher transportation expenses can increase the delivered cost of crude for importing refiners even when benchmark prices or production volumes remain relatively stable.

The bank also highlighted declining global petroleum inventories. Visible oil stocks have fallen by more than 500 million barrels since February, while emergency reserve releases have provided a temporary buffer against supply disruptions.

With much of that emergency supply already released, additional shortages could place greater pressure on commercial inventories.

Recovering Chinese crude imports represent another source of demand, potentially tightening competition for internationally traded barrels as Asian refiners rebuild purchases.

For exploration and production companies, sustained oil prices near $110 could support operating cash flow, debt reduction, and shareholder distributions, depending on production costs and hedging arrangements.

Refiners face a more complicated outlook. Higher crude acquisition costs and transportation expenses can pressure profitability unless gasoline, diesel, and other product prices rise sufficiently to preserve margins.

Midstream operators, tanker companies, and infrastructure providers may experience increased demand for transportation alternatives, storage capacity, and export infrastructure.

However, geopolitical developments could change the outlook quickly. A durable regional agreement and improved shipping security could reduce freight costs and the risk premium embedded in crude prices.

For investors, the revised UBS forecast highlights the importance of monitoring physical oil flows, tanker availability, inventories, and international demand alongside traditional production and consumption forecasts.