UBS Raises Oil Price Forecast Amid Geopolitical Risks, But Surplus Fears Loom

UBS has slightly raised its Brent crude oil forecast for 2025, citing elevated geopolitical risks. However, the bank maintains a broadly cautious outlook, highlighting the potential for growing supply surpluses and fading seasonal demand.

In a note to clients, UBS lifted its 2025 Brent price forecast by $1 to $67 per barrel. The revision reflects lingering tensions in the Middle East after the Q2 Iran-Israel conflict, which temporarily pushed oil above $80 per barrel. Prices have since retreated as the threat of disruption eased.

Short-Term Spike, Long-Term Pressure

For the third quarter of 2025, UBS now expects Brent to average $65, up from its prior $62 forecast. However, analysts predict that prices could dip into the low $60s by late 2025, barring fresh geopolitical shocks.

“With disruption to Middle East oil supply no longer looking like an immediate risk, we expect the oil market's focus to shift back to fundamentals and the picture still looks bearish near-term,” the bank wrote.

Key drivers of this shift include:

• OPEC+ production hikes, expected to continue in August

• Waning summer demand, as seasonal fuel consumption peaks

• Rising inventories, as output outpaces consumption

Surpluses Could Drag Brent Below $60

UBS warned that additional OPEC+ supply increases or weaker global demand could pull Brent below $60. Conversely, tighter compliance or fresh conflict could drive prices temporarily higher.

“Key dates to watch include the 6 July OPEC+ decision on August production, but we see the following decision in early August as a more important indicator,” analysts noted.

Relevant Market Data and Tools

To track these developments, investors can use:

🛢 Commodities API - Monitor real-time prices and historical trends for Brent, WTI, and other key commodities. This helps investors contextualize UBS's forecast against actual market movements.

📆 Economics Calendar API - Stay informed about OPEC+ announcements, inventory reports, and macroeconomic indicators that can influence oil prices globally.

Outlook

While UBS's forecast reflects a modestly bullish tilt in the short term, the broader oil market narrative is increasingly bearish. Unless supply discipline returns or demand surprises to the upside, Brent is likely to struggle to hold above $65 through year-end.

The market's next turning point may hinge on OPEC+'s August production strategy.