<\/p>\n
Oil markets have a stubborn habit of teaching the same lesson twice. The first time hurts. The second time costs even more.<\/p>\n
Traders learned that lesson in the 1970s, when two separate supply shocks rewired global commerce in less than a decade. They learned it again in 2008, when crude punched through $147 a barrel and turned a U.S. housing downturn into a worldwide recession.<\/p>\n
Now Wall Street is bracing for another expensive lesson.<\/p>\n
The 2026 oil market has shredded almost every forecast written before February. A U.S.-Israeli campaign against Iran began on Feb. 28 and shut down meaningful flows through the Strait of Hormuz, the narrow chokepoint that handles roughly a fifth of the world’s seaborne crude. Brent briefly cleared $114 a barrel in May. American gasoline averaged $4.48 a gallon by mid-May, up from $2.98 before the war started, according to AAA.<\/p>\n
And the bad news for anyone hoping prices ease before year-end is that one of the world’s largest banks just raised its oil forecasts again. UBS Group (UBS) is telling clients to expect Brent crude near triple digits for months, not weeks.<\/p>\n
UBS raises oil price forecasts amid supply disruption concerns.<\/p>\n
Bloomberg / Getty Images<\/p>\n
What is keeping oil prices stuck this high<\/p>\n
The Strait of Hormuz is the single most important waterway in the global oil trade. Roughly 20 million barrels of crude and refined products pass through it on a typical day, mostly bound for Asia and Europe. When the war began on Feb. 28, that number collapsed.<\/p>\n
I flagged the structural risk in early April, when UBS first warned about Hormuz closure scenarios. The follow-on data has been worse than that warning implied.<\/p>\n
More Oil and Gas:<\/p>\n
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Global oil supply has dropped by 12.8 million barrels per day since February, while on-land inventories drew down by 170 million barrels in April alone, according to the International Energy Agency.<\/p>\n
For context, that is the steepest inventory drawdown the agency has tracked since it began publishing the data. North Sea Dated crude averaged $120.36 a barrel in April, a $16.50 monthly jump that the IEA directly compared to the two 1970s oil shocks happening at once.<\/p>\n
The U.S. Energy Information Administration moved nearly as fast as the market. The EIA raised its full-year 2026 Brent forecast to $96 a barrel in its April Short-Term Energy Outlook, up from $78.84 a barrel a month earlier.<\/p>\n
In my own analysis of the supply data, this looks less like a temporary spike and more like a structural shift in how the global oil market prices Middle East risk. The barrels coming out of the system are not coming back quickly, and the buyers waiting for them are not waiting patiently.<\/p>\n
Related: Exxon CEO delivers message on Strait of Hormuz, oil prices<\/p>\n
Where UBS sees oil prices headed through year-end<\/p>\n
UBS, one of Europe’s largest banks and a top global oil research desk, is not predicting a quick return to normal. The Swiss firm raised its Brent crude forecast in mid-April for the second time this year, citing persistent supply disruption through the Strait of Hormuz, The Globe and Mail highlighted.\u00a0<\/p>\n
The bank now expects Brent to hit $100 a barrel by the end of June, $95 by the end of September, and $90 by the end of December 2026. UBS also set its first-quarter 2027 target at $85 a barrel, signaling the bank does not see prices fully normalizing for nearly a year.<\/p>\n
UBS commodity strategist Giovanni Staunovo has said as much as 10 million barrels of crude per day are “in jeopardy” if the Hormuz closure continues, according to CNBC.<\/p>\n
I ran those numbers against pre-war Brent forecasts that mostly sat in the mid-$70s, and what struck me is how casually some traders are still calling this a short-lived event. UBS is effectively telling them the opposite.<\/p>\n
The bank also flagged that West Texas Intermediate prices will lag Brent, partly because of a planned release from the U.S. Strategic Petroleum Reserve and partly because of concerns around a possible U.S. crude export ban.<\/p>\n
Here is how the 2026 shock now stacks up against the last two major ones:<\/p>\n
1973 Arab oil embargo:crude oil prices roughly quadrupled in four months, according to the Federal Reserve History archive.2008 demand spike: WTI crude peaked at $147.27 a barrel on July 11, according to U.S. Energy Information Administration data.2026 Hormuz shock: Brent is up roughly 50% since Feb. 28 and is still trading near $107, according to Trading Economics.What higher-for-longer oil means for your wallet<\/p>\n
The pain does not stop at the pump.<\/p>\n
Every sustained $10-per-barrel rise in Brent typically adds about 25 cents to the average national price of regular gasoline, according to Lipow Oil Associates. Andy Lipow, the firm’s president, told CNN that gas could test $5 a gallon if the Strait of Hormuz remains blocked through next month.<\/p>\n
Higher oil also feeds into headline inflation through diesel, jet fuel, and petrochemicals used in everything from packaging to fertilizer. That makes it harder for the Federal Reserve to cut interest rates, which keeps mortgage rates and credit card APRs elevated for longer.<\/p>\n
Saudi Aramco CEO Amin Nasser put the timing bluntly. The oil market will not normalize until 2027 if the Strait of Hormuz stays blocked beyond mid-June, Nasser told investors on the company’s first-quarter earnings call, according to CNBC.<\/p>\n
For drivers, that means another summer of $4-plus gasoline. For retirees on fixed incomes, it means heavier monthly bills on heating, food, and travel. For investors, it means a forced rethink of how much energy exposure belongs in a 2026 portfolio that may have been built around assumptions that no longer hold.<\/p>\n
The forward look on oil prices in late 2026<\/p>\n
UBS is not the loudest voice on this trade, but it may be the most representative one. Goldman Sachs raised its 2026 Brent forecast to $85 a barrel earlier this spring, as highlighted by TheStreet. ING followed in April with a base case of $104 a barrel for the second quarter and $92 a barrel for the fourth quarter, according to ING Think.<\/p>\n
The market itself is signaling more pain ahead. Brent futures for delivery six months out posted their largest single-day jump since 2022 earlier this month.<\/p>\n
What is worth watching next is not the headline barrel price but the Brent\u2013WTI spread, which widened to an average of $12 a barrel in March, according to the EIA. A wider spread tells you the global market is tighter than the U.S. one, and that any new Hormuz incident will hit foreign-fueled portfolios faster than Washington can respond.<\/p>\n
For now, UBS has drawn its line. The bank says Brent stays near $90 through the end of the year and only eases into the low $80s by spring 2027. Anyone budgeting a vacation, a tank of gas, or a portfolio rebalance into next year has officially been warned.<\/p>\n
Related: Bank of America sees writing on the wall for Strait, oil prices<\/p>\n
#UBS #sounds #alarm #oil #price #rest<\/p>\n","protected":false},"excerpt":{"rendered":"
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