UBS Cuts Oil Price Forecasts for 2026-2027 on Hormuz Recovery
UBS has lowered its oil price outlooks for 2026 and 2027 as shipping flows through the Strait of Hormuz show signs of recovery.
UBS slashed its oil price forecasts for 2026 and 2027 on Friday, citing improving crude flows through the Strait of Hormuz as a key driver behind the bank's more bearish outlook on global energy markets. The Swiss banking giant's revision signals growing confidence that one of the world's most critical oil chokepoints is stabilizing after a period of heightened geopolitical tension that had threatened supply disruptions.
The Strait of Hormuz, a narrow waterway between Iran and Oman, channels roughly one-fifth of the world's oil supply and has historically been a flashpoint for price volatility whenever regional conflict escalates. A recovery in transit flows through the strait reduces the supply-risk premium that traders typically bake into crude futures, putting downward pressure on forward prices.
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UBS joins a growing list of major financial institutions reassessing their energy price outlooks amid shifting geopolitical dynamics in the Middle East. The bank's downward revisions reflect both the easing of Hormuz-related supply fears and broader expectations of softer global oil demand growth over the medium term, factors that together weigh on the price trajectory heading into the latter half of the decade.
For energy markets, the UBS forecast cut adds to a chorus of cautious signals from analysts who see limited upside for crude over the next two years barring a fresh geopolitical shock or a significant supply-side disruption. Investors and commodity traders will be watching closely to see whether other major banks follow suit with similar downward revisions in the weeks ahead.
Continue reading at Reuters.
