• UBS (UBS) raised its year-end Brent target to $110 per barrel from $100, citing Middle East supply disruptions, declining inventories, and record shipping costs.
  • The bank also lifted its March 2027 target to $95 and June 2027 target to $90, while warning that its central scenario still anticipates prices falling during 2027.
  • Global visible oil inventories have fallen by more than 500 million barrels since February, according to the report, while tanker freight costs from the Middle East to China have surged to $30–$40 per barrel.

UBS has raised its year-end Brent crude forecast to $110 per barrel from $100, as escalating Middle East tensions and a sharp drawdown in global oil inventories continue to pressure prices. The Swiss banking giant also lifted its March 2027 target to $95 from $90 and its June 2027 target to $90 from $85, according to a research note published Tuesday. The revision underscores a shift in the bank’s outlook from a production-driven shortfall to what it describes as a logistics problem: Gulf exports have recovered substantially from earlier lows, but attacks on shipping, scarce tanker capacity, and depleted inventories are keeping delivered oil expensive.

“The market is no longer pricing a simple supply outage; it is pricing the difficulty of moving barrels safely and economically,” said Giovanni Staunovo, an analyst at UBS, in the note. He added that forecast uncertainty remains “high” given the fluid security situation. UBS’s central scenario still anticipates prices easing during 2027, with the September target set at $85, but the bank cautioned that renewed attacks could quickly reverse that path.

Brent settled at $113.88 on October 27, down 1.67% as diplomatic efforts eased immediate supply fears, though reporting on October 28 put it back around $115.10 intraday—illustrating how rapidly conflict expectations are moving prices. The bank’s revised forecast implies prices will remain above its year-end target for now, a sign of just how elevated the risk premium has become. Supply recovery has not restored normal trading conditions: combined Hormuz and bypass-pipeline flows reached roughly 18.8 million barrels per day in early October, versus 19.9 million before the conflict, according to the report. At least 30 attacks on vessels in and around the Strait of Hormuz were reported during October.

Inventory Buffers Thinner

Adding to the pressure, global visible oil inventories have fallen by more than 500 million barrels since February, while pledged strategic-reserve releases are largely complete, leaving less cushion against further shocks. Chinese crude imports have recovered from earlier lows, increasing competition for available barrels. The freight market has also become a major factor: tanker costs from the Middle East to China have surged to $30–$40 per barrel, a record range that effectively adds a substantial premium to every delivered cargo. UBS noted that costly transport changes which crude grades are economical to buy and where refiners source them, with Asian importers particularly exposed.

The supply-chain stress extends beyond crude. Reporting identifies constrained Middle Eastern petroleum-product shipments and attacks on Russian refineries as additional sources of pressure, particularly for diesel. In response, the Trump administration has offered to loan up to nearly one-third of the US Northeast’s one-million-barrel emergency heating-oil reserve to contain diesel shortages, while the European Parliament voted to approve a three-year delay to EU methane-emissions rules for oil and gas imports. Those moves highlight how the shock is bleeding into policy decisions on affordability and energy security.

The broader economic transmission channels are also becoming clearer. Persistent oil and transportation costs add inflation pressure, complicating central banks’ efforts to support growth while controlling prices. For UBS itself, the oil forecast comes as the bank reported third-quarter results on October 28, with revenue of $13.35 billion, up 5% year over year, and net profit of $2.69 billion, up 8.4%. The bank also confirmed it remains on track to substantially complete its Credit Suisse (CS) integration by year-end and now targets approximately $13.7 billion in cumulative gross cost savings, up from $13.5 billion.

UBS said its forecast is subject to “elevated uncertainty” and that a credible diplomatic breakthrough could reduce the risk premium quickly, as demonstrated by the October 27 price decline. Conversely, fresh attacks on shipping or infrastructure could further constrain tanker availability. “The key question is not simply whether producers can pump more oil, but whether sufficient barrels can reach consumers safely and economically while stocks are rebuilt,” Staunovo said. UBS did not immediately respond to a request for further comment on the report.

Correction: An earlier version of this article misstated the September 2027 Brent target. It is $85 per barrel, not $80.