UBS cuts Brent crude forecasts as Hormuz traffic nears pre-war levels

UBS ↗ 0.43% on Thursday cut its Brent crude oil forecasts sharply, abandoning its earlier call for near-$100 oil as the rapid resumption of tanker traffic through the Strait of Hormuz unwinds the supply disruptions that defined the first half of 2026.

The Swiss bank now expects Brent at $85 a barrel at end-September and end-December, down from previous targets of $105 and $95, respectively. UBS also set its end-March and end-June 2027 forecasts at $80 a barrel. The revision marks a stark retreat from April, when UBS raised its end-of-June 2026 target to $100 citing restricted flows through the strait.cnbc+1

Oil Prices Hit Pre-War Lows

The downgrade came as global crude prices extended a sell-off that has effectively erased gains accumulated since the U.S. and Israel launched strikes against Iran on February 28. On Wednesday, Brent crude futures fell 4.4% to settle at $73.74 a barrel — their lowest since February 27 — while West Texas Intermediate dropped 3.8% to $70.34, briefly dipping below $70 for the first time since early March.reuters+1

The rout followed a week of cascading developments. A memorandum of understanding signed between Washington and Tehran around June 15 triggered an immediate reopening of the Strait of Hormuz. On Monday, the U.S. Treasury issued a sweeping 60-day sanctions waiver permitting Iran to sell crude in U.S. dollars for the first time since the Islamic Revolution. U.S. Energy Secretary Chris Wright said at the Reuters Global Energy Forum that roughly 20 million barrels of crude exited Hormuz in the 24 hours before Wednesday's close, and that shipping activity had nearly returned to pre-conflict levels.cnbc+4

Market Structure Shifts

For the first time since the conflict began, Brent's forward curve flipped into contango — with futures prices exceeding spot — signaling that near-term supply tightness has given way to a glut of returning barrels. Three previously stranded tankers carrying 5 million barrels of crude were observed exiting the strait on Wednesday alone, with two heading to Asia.reuters

Despite its forecast cut, UBS cautioned that the production recovery may prove "slower than the market expects," noting that its $85 target still implies upside from current levels. J.P. Morgan JPMorgan Chase & Co. ↘ 0.00% also revised its second-half outlook downward, projecting Brent at $86 in the third quarter and $80 in the fourth.boereport+1

Fragile Peace, Uncertain Path

The durability of the price decline hinges on whether the interim 60-day framework evolves into a lasting agreement. Talks on Iran's nuclear program remain unresolved, and Israel has refused to consider itself bound by the deal. U.S. Secretary of State Marco Rubio is touring Gulf states this week to build regional support for the accord, while Trump envoy Steve Witkoff headed to Switzerland for initial nuclear discussions with Tehran.reuters+1