Global investment bank UBS has reduced its oil price forecasts for 2026 and 2027 after the quicker-than-expected recovery of oil shipments through the Strait of Hormuz eased concerns about supply disruptions.
The Swiss financial institution said improved oil flows followed the interim memorandum of understanding (MoU) signed between the United States and Iran on June 17. The agreement has lowered geopolitical tensions and helped restore confidence in global oil markets.
According to UBS, Brent crude oil is now expected to average $84 per barrel in 2026, which is $9 lower than its previous forecast. The bank also lowered its 2027 Brent forecast to $75 per barrel, a reduction of $10. Similarly, its forecast for West Texas Intermediate (WTI) crude has been revised down to $79 per barrel in 2026 and $71 per barrel in 2027.
Analysts led by Henri Patricot explained that the faster return of oil supplies and reduced geopolitical risks caused oil prices to fall more quickly than previously expected. They noted that while prices may recover slightly later in 2026, they are unlikely to reach the higher levels earlier projected.
UBS now expects Brent crude to average around $80 per barrel during the second half of 2026. This is significantly lower than its previous estimates of $105 per barrel for the third quarter and $90 per barrel for the fourth quarter. The bank believes that as floating oil storage in the Gulf returns to normal and global demand gradually improves, prices will stabilize.
Despite the changes to its short-term outlook, UBS maintained its long-term oil price forecast of $75 per barrel from 2028 onward.
Since the U.S.-Iran agreement was announced, oil shipments through the Strait of Hormuz have recovered to about 50 percent of pre-conflict levels. Iranian crude exports have also increased as U.S. restrictions eased, allowing more oil to reach international markets.
The report also showed that the United Arab Emirates has restored nearly 85 percent of its pre-conflict oil exports, thanks to alternative export routes. Meanwhile, Saudi Arabia’s exports remain around 25 percent below pre-conflict levels, although shipments in June rose by about 10 percent compared to May.
UBS warned that uncertainty still surrounds the global oil market. If the agreement between the United States and Iran breaks down and regional tensions rise again, oil prices could climb back to around $100 per barrel. In a more severe scenario involving attacks on major oil infrastructure, prices could even exceed $120 per barrel.
On the other hand, if oil production increases more rapidly in countries such as the UAE and Iran, and supply continues to recover, Brent crude could fall below $70 per barrel. Additional production from Venezuela could push prices even lower, possibly to around $60 per barrel.
The bank also reduced its estimate for global oil inventory rebuilding in 2027. It now expects inventories to increase by about 1 billion barrels, compared to its earlier estimate of 1.5 billion barrels, reflecting stronger-than-expected supply growth.
UBS projects that the global oil market will remain in supply deficit through the third quarter of 2026 before moving into surplus during the final quarter of the year. The surplus is expected to grow further throughout 2027 as production outpaces demand.
The report also highlighted China’s influence on the oil market. The country’s crude oil imports dropped sharply to about 6 million barrels per day in June, well below its usual import level of 10 to 11 million barrels per day, raising fresh questions about global demand and its impact on future oil prices.
