UBS has revised its oil price forecasts for the years 2025 to 2027 following OPEC+’s unexpected decision to increase oil production. The investment bank has lowered its price predictions for both 2025 and 2026 by $3 per barrel, bringing them down to $72, while the forecast for 2027 has been reduced by $2 to $73 per barrel.
Despite these adjustments, UBS maintains its long-term outlook at $75 per barrel from 2028 onward, anticipating a slowdown in non-OPEC+ supply growth. The updated projections come on the heels of OPEC+’s announcement in early March to reintroduce barrels into the market starting in April.
UBS analysts, led by Henri Patricot, expressed that they still view the oil market as finely balanced for 2025 due to other compensating factors, such as decreased production from Venezuela and Iran. They have cautioned, however, that the market is likely to remain volatile amid ongoing uncertainties.
Analysts anticipate that Brent crude is more likely to be priced within the lower half of their estimated range of $65 to $85 per barrel. While the OPEC+ decision poses a downside risk to UBS’s earlier $75 per barrel outlook, the bank identifies additional risks that could influence the market.
These include potentially weaker oil demand, exacerbated by tariffs that may hinder global GDP growth. Furthermore, U.S. policies towards oil-producing nations like Venezuela, Iran, and Russia could lead to significant supply disruptions, impacting overall oil supplies more than currently anticipated.
UBS views the OPEC+ announcement not as a fundamental shift in strategy, but as evidence of the group’s willingness to adjust production in response to market conditions. They also express skepticism regarding full compliance with compensatory cuts, citing Kazakhstan’s plans and historical performance.
Additionally, UBS highlights that OPEC+’s considerable spare capacity serves as a buffer against rising price risks by allowing the group to swiftly ramp up production during disruptions or to intervene if demand falls short.