• UBS lifts its oil price forecasts for 2026 and 2027, citing supply disruptions from the Strait of Hormuz closure and ongoing Middle East conflict.
  • The bank now expects $86 per barrel in 2026, up $14, and $80 in 2027, up $10, assuming the conflict persists for another 2-3 weeks.
  • Analysts project sharply reduced flows through the Strait, with gradual recovery starting in April but no full normalization, signaling tighter markets in the near term.

UBS Group AG (UBS) has revised its oil price forecasts upward for 2026 and 2027, reflecting heightened supply risks from the Strait of Hormuz situation and broader Middle East tensions. The Swiss financial services firm now anticipates Brent crude at $86 per barrel in 2026, a $14 increase from previous estimates, and $80 in 2027, up $10, according to people familiar with the matter. This adjustment comes as the bank assumes the current conflict will last another 2-3 weeks, keeping flows through the critical chokepoint sharply reduced.

Efforts to stabilize oil markets have hit a snag, with the Strait of Hormuz closure disrupting a key artery for global supply. Analysts note that gradual recovery may begin in April, but full normalization is unlikely, pushing prices higher as spare capacity dwindles. "The scenario hinges on Middle East conflict dynamics and potential blockages in Hormuz," one source said, highlighting how even rumors of disruption can spike Brent and WTI benchmarks. UBS did not immediately respond to requests for comment on the forecast changes.

Global oil prices have been sensitive to these constraints, with recent market data showing increased volatility as traders price in prolonged risk. Other institutions have similarly adjusted their outlooks, signaling a broader shift in energy-market expectations amid geopolitical uncertainty. Without a swift resolution, the disruptions could raise transport and energy costs for households and businesses, particularly in regions with high energy intensity.

In the short term, oil prices are likely to remain supported near elevated levels if Hormuz flows stay constrained, with potential swings around geopolitical headlines. The medium to long-term path depends on how quickly supply re-stabilizes, OPEC+ actions, and demand resilience. UBS's revised forecasts reflect an upside bias tied to ongoing risk, though consensus varies on the persistence of disruptions. This update underscores the fragile balance in energy markets as tensions simmer.