UBS Oil Price Forecast: Brent Toward $65-70 As Risk Premium Fades - Exchange Rates Org UK

What the desk is arguing

UBS foresees a downtrend in Brent crude prices to a range of $65-$70 as the current risk premium associated with geopolitical disruptions starts to fade. The bank points to increasing supply levels and stabilizing global production as pivotal factors underpinning this forecast.

Supporting UBS’s view, a less volatile geopolitical landscape combined with stronger production outputs from OPEC+ and non-OPEC nations might further suppress prices. This outlook implies reduced stress in energy markets, which could ultimately shift the focus in FX markets tied to oil performance.

Where it sits in our coverage

Our consensus target reflects a different stance, with an established target around 1.075 for oil-related currencies, indicating a broader expectation for stability rather than sharp declines. This perspective somewhat diverges from UBS's forecast, as we expect to see less volatility in currency pairs closely related to oil prices.

• Barclays: Target $1.08 by Dec-26
• JPMorgan: Target $1.10 by Dec-26
• Goldman Sachs: Target $1.07 by Dec-26

How other firms see it

In reviewing the broader market's perception, some firms align with UBS’s bearish outlook on oil prices due to anticipated increases in supply and diminishing geopolitical risk. However, others maintain a more positive stance on pricing stability, suggesting that external factors such as demand recovery might still support higher levels.E.g., Goldman Sachs provides a target in line with stability.

• Barclays: aligned, anticipating stability
• Credit Suisse: contrary, expecting higher prices given demand recovery