UBS analysts have revised upward their outlook for oil prices over the near term, pointing to intensifying conflict in the Middle East and the continued effective closure of the Strait of Hormuz as the principal drivers of higher forecasts.
In a research note, the team that includes Henri Patricot and Nayoung Kim said they now expect average Brent crude futures to trade at $86 a barrel for the year, up from a prior projection of $72 a barrel. Their view for 2027 was also raised to $80 a barrel from $70 a barrel.
The analysts framed the revision around a specific operational assumption of the conflict - that it persists for another two to three weeks through early April and that exports via the Strait of Hormuz remain sharply curtailed. Under those circumstances, they wrote, prices could briefly exceed $120 a barrel.
Forecast assumptions and caveats
UBS emphasized that its updated numbers do not presuppose physical damage to major oil fields or export terminals. The strategists linked the near-term spike in prices to recent attacks on energy infrastructure, noting that their scenario envisions a temporary surge followed by a partial recovery in flows.
Earlier in the week, Benchmark Brent spiked to about $119 a barrel after an Israeli strike targeted South Pars, the Iranian portion of what is described as the world’s largest natural gas deposit. Iran then responded with strikes on energy production facilities in the region, including a significant site in Qatar.
The bank expects a gradual resumption of shipments through the Strait of Hormuz starting in April, which would help bring Brent down to $100 a barrel in the second quarter. Nevertheless, UBS cautioned that a higher risk premium - intended to protect against ongoing disruption risks - together with the need for market participants to rebuild inventories will keep prices elevated through 2027.
Markets were reacting to the escalation. On Friday, Brent crude futures were last trading around $108 a barrel.
Operational and regional impacts
The exchange of bombardments on major energy infrastructure has amplified concerns that even if U.S. and allied efforts succeed in reopening maritime routes through the Strait of Hormuz, the supply picture could remain impaired for an extended period. The Strait is a critical maritime chokepoint south of Iran through which roughly one-fifth of global oil supplies transit.
Qatar reported that Iranian strikes on the Ras Laffan natural gas complex reduced the country's export capacity by 17% and that repairs could take as long as five years. As a major exporter of natural gas, particularly to Europe, the hit to Qatar's output has contributed to a surge in the regional natural gas benchmark and heightened inflation concerns.
Geopolitical developments and official responses
Reports indicate Iran has continued to launch retaliatory strikes, and some U.S.-aligned countries around the Middle East have reported incoming drones and missiles. Simultaneously, Israel targeted locations in Tehran after missile alarms sounded in Jerusalem and northern parts of the country.
In a statement cited in coverage of the fighting, Iranian Supreme Leader Mojtaba Khamenei said that "safety must be taken away from our domestic and foreign enemies and given to our people." The comment was presented as a defiant message amid a campaign in which Israel has been targeting figures within Iran’s ruling establishment.
Separately, Israeli Prime Minister Benjamin Netanyahu said that U.S. President Donald Trump had asked Israel to refrain from conducting further attacks on Iranian energy infrastructure for the time being.
The U.S. administration has been active in trying to calm markets worried by the prospect of longer-term oil supply disruptions. U.S. Treasury Secretary Scott Bessent suggested Washington may release additional emergency oil supplies and could lift some sanctions on Iranian crude exports as options to alleviate tightness.
Market implications
UBS’s upward revisions reflect a near-term scenario where constrained flows and direct hits on production or export-related sites push prices sharply higher before a measured easing as shipping lanes reopen. The strategists’ projection that higher prices will persist through 2027 is anchored to two factors they explicitly identify - an elevated risk premium and the requirement for markets to rebuild inventories depleted during the disruption.
Given the cross-border nature of the strikes and retaliation, the pricing response has broadened beyond crude markets to regional natural gas benchmarks, with European prices in particular experiencing upward pressure tied to the Qatar outage.
While UBS’s baseline does not assume physical destruction at major oil fields or terminals, the firm’s scenario work underscores how sensitive price outcomes are to the duration of the conflict and the pace at which Strait of Hormuz traffic can return toward normal levels.