UBS lowers its forecast for Brent crude
oil prices UBS bank announced a reduction in its forecast for Brent crude oil prices, expecting it to reach 62 dollars per barrel by the end of 2025, and then recover to 65 dollars by mid-2026, compared to a previous forecast of 68 dollars.
What are the reasons for UBS to adjust its forecasts for oil prices
1- ِincrease in oil production in South America, especially from Brazil, which recorded record production after recovering from a decline in 2024.
2- The flexibility of supplies to sanctioned countries such as Venezuela (after a license was granted to Chevron) and Iran (whose production reached the highest level in years).
3- postponement of tough sanctions on Russian oil buyers (with the exception of India).
4-expectations of the accumulation of global stocks with continued oversupply.
OPEC may maintain its current policies
Analysts expect the OPEC alliance to keep its production policies unchanged after the last increase in production last September.
Giovanni stonovo, strategist at UBS, suggests that the group may stick to its current position unless there are major supply disruptions in the markets.
He also noted the decline in crude oil exports to its members compared to last March levels, despite the easing of production restrictions, the most important reasons for this were:
- Increased domestic consumption due to the heat wave in the Middle East.
- Actual production increases are smaller than expected.
Geopolitical tensions and price pressures
Oil prices fell during today's trading, as Brent crude fell below 65 dollars, and West Texas crude fell below 63 dollars, amid anticipation of the meeting of the US and Russian presidents in Alaska this week to discuss ending the Ukrainian war.
One of the most important reasons for this current decline was:
- Exceeding the deadline for sanctions on Russia without imposing new measures has weakened prices.
- Speculators lowered their bullish forecasts despite the risks of supply shortages due to possible sanctions.
- US tariffs on imports increase fears of a slowdown in global demand.
Future challenges: between supply and demand
Despite the current pressures, prices remain subject to sharp fluctuations due to:
- The developments of the US-Russian talks and their impact on oil sanctions.
- OPEC's decisions in light of the market balance between production and demand.
- Global economic data, especially with the continuing impact of the trade war.
Oil seems to be entering a new phase of instability, as factors of abundant supply are grappling with geopolitical and economic concerns, making it one of the most dynamic assets in the coming months.
