UBS Analysts Revise Down Oil Price Forecasts for 2024-2026, Predicting Lower Prices Ahead
UBS analysts have recently adjusted their oil price forecasts for the upcoming years, anticipating a decrease in prices due to weaker global demand and a more stable supply outlook. The new forecast for oil in the fourth quarter of 2024 has been reduced to $75 per barrel from $83, with the 2024 average price now at $80 per barrel. This adjustment reflects the bank’s view of a softer global demand environment, especially with slower economic growth in key markets like China.
For 2025 and 2026, the Brent forecast has also been lowered to $75 per barrel. Additionally, UBS analysts believe that OPEC+ will likely delay the unwinding of its voluntary production cuts until 2027 or 2028, compared to previous expectations of a return by mid-2025. The market remains finely balanced, with weaker demand and steady non-OPEC+ supply growth reducing the need for an increase in output.
The subdued demand outlook and higher-than-expected non-OPEC+ supply growth are expected to keep oil prices soft in the coming years. UBS predicts a likely trading range of $65 to $85 per barrel for Brent, with potential for prices to rise above $90 per barrel in case of geopolitical tensions. Conversely, a global recession could push prices into the $60s.
In the long term, UBS foresees a slowdown in global oil demand growth, driven by factors like increasing vehicle fuel efficiency and the rising adoption of electric vehicles. Peak oil demand is expected to be reached by 2029, with EV penetration likely to replace a significant portion of oil consumption by 2030.
In conclusion, the revised oil price forecasts suggest a challenging environment for oil markets in the coming years, with potential for both upside and downside risks depending on various factors like demand growth, supply dynamics, and geopolitical developments. Investors and consumers should closely monitor these trends to make informed decisions regarding their finances and energy consumption.