Swiss bank UBS (NYSE: $UBS) has raised its crude oil price forecast by $10 U.S. per barrel as disruptions persist in the Middle East.
Commodities analysts at UBS project that Brent crude oil, the international standard, will trade at $105 U.S. per barrel and U.S. West Texas Intermediate (WTI) crude at $97 U.S. by year’s end.
In a note to clients, UBS said that near-term risks remain skewed to the upside as the Strait of Hormuz near Iran, where 20% of the world’s oil is shipped, remains effectively closed.
The bank added that if the current supply disruptions continue, prices could overshoot in the short term and trigger significant demand destruction.
In a worst-case scenario, Brent crude oil could trade above $150 U.S. per barrel in coming months, said UBS.
The analysts note that scarcity fears could lead to hoarding among nations and further amplify price movements.
UBS says that oil production losses likely reached 650 million barrels in March and April of this year after the U.S. and Israel attacked Iran and are on track to exceed one billion barrels by the end of May this year.
Brent crude oil is currently trading at $109.04 U.S. a barrel.
