• UBS (UBS) raised its December oil forecasts by $5 per barrel, citing declining inventories and escalating attacks in the Strait of Hormuz.
  • The bank now sees Brent at $100 and WTI at $96 by year-end, but cautions the outlook remains highly uncertain.
  • Shipping attacks are intensifying even as regional crude exports recover, with diesel shortages persisting and production recovery incomplete.

UBS Raises Oil Forecasts on Hormuz Risks

UBS has raised its December oil price forecasts by $5 per barrel, citing declining inventories and escalating attacks in the Strait of Hormuz that have increased the geopolitical risk premium. The bank now sees Brent at $100 and WTI at $96 by year-end, according to the revised outlook. The Swiss lender cautioned that the forecast remains highly uncertain, depending on the trajectory of the Middle East conflict and the pace of recovery in Gulf oil production.

The revision comes as shipping attacks in the strategic waterway are intensifying. An October 6 report cited at least seven tanker incidents over the preceding week, and India’s foreign ministry reported that 12 crew members were injured when a Panama-flagged tanker was hit while crossing Hormuz that Tuesday. The attacks have kept a persistent risk premium embedded in oil prices even as regional exports have rebounded from the initial shock of the conflict.

Kpler’s provisional seven-day average for Middle East crude exports reached 18.3 million barrels a day on September 30, versus approximately 18 million before the war. However, this measures regional exports—not exclusively traffic through Hormuz. About 40% of those flows now bypass the strait, with offshore tanker transfers helping move other cargoes. The shift has restored volumes but requires more ships and raises freight, security, and insurance expenses. Analyst Chris Beauchamp described the disruption as increasingly a shipping-capacity problem rather than simply a crude-supply problem.

Production recovery, meanwhile, remains incomplete. On October 5, Kuwait Petroleum’s CEO said output had recovered to approximately 2 million barrels a day, or 75% of its prewar level of about 2.6 million. Export recovery and production recovery are therefore not interchangeable, and the gap helps explain why supply reliability remains a concern.

Fuel shortages present a separate challenge. October 6 reporting described crude shipments approaching prewar levels while diesel shipments remained severely constrained. The disparity helps explain why recovering oil exports have not eliminated pressure on transport and heating costs. The G7’s October 2 announcement of up to 100 million barrels of crude and diesel releases over four months, prioritizing a substantial diesel release within the first 20 days, was aimed squarely at that problem. Some volumes overlap earlier commitments, so the headline amount should not be interpreted as entirely new supply.

The market continues to weigh these opposing forces. October 6 reports placed Brent around $99–$100, while December WTI futures were quoted at $87.54 at one reporting point. These are dated market snapshots, not live prices. The headline’s $96 WTI forecast implies a meaningful rebound from that futures quotation, underscoring the premium UBS assigns to continued disruption.

UBS’s forecast is research for clients and not an announcement about its own oil production or reserves. The bank reported $7.3 trillion in group invested assets in its latest published quarterly results, with second-quarter 2026 net profit of $2.8 billion and a CET1 capital ratio of 14.4%. Wealth management attracted $36 billion in second-quarter net new assets, while investment-bank underlying revenue rose 31% year over year. Sergio Ermotti remains group CEO.

There is precedent within this crisis for forecasts reversing direction. Reuters (TRI) reported on June 26 that UBS had cut its end-December Brent forecast to $85 from $95 as Hormuz flows improved. The episode illustrates how sensitive these projections are to changing shipping conditions, although it does not independently verify the figures in the latest headline.

Political developments are directly affecting the supply-and-demand balance. G7 leaders reaffirmed their commitment not to restrict energy exports between members and urged producers to avoid export bans, a stance that matters because restrictions could compound regional fuel shortages. US military protection and alternative export routes have supported the rebound, though Washington and Tehran dispute who controls the strait, and attacks continue. Apparent export normalization does not establish a diplomatic resolution.

Parallel chokepoint risks also loom. Attacks in the Gulf of Aden and renewed fighting near Bab al-Mandeb threaten shipping beyond Hormuz, including routes connected to the Red Sea. PVM analyst Tamas Varga argues that restored flows depend on keeping alternative routes secure and that a credible peace agreement and unconditional reopening would be needed to re-establish pre-conflict conditions.

Looking further out, reopening Hormuz would not necessarily repair inventories immediately. Saudi Aramco (2222.SR) CEO Amin Nasser warned on October 5 that almost three billion barrels of supply had been lost since the conflict began and that rebuilding inventories while meeting demand could take up to two years. That is an industry executive’s estimate, not a settled outcome.

Three developments are especially worth watching: Kuwait’s production recovery, the actual delivery of diesel reserves, and refining and shipping constraints. Crude availability can improve while diesel remains scarce—the clearest reason not to treat lower oil prices as immediate relief for every consumer or industry.

UBS did not respond to a request for comment on the revised forecasts.

Correction: An earlier version of this article misstated the prewar level of Kuwait Petroleum’s output. It was approximately 2.6 million barrels a day, not 2.4 million.