Brent Forecast Raised to $77.50, UBS Overweights Energy Sector
Bank of America lifted its Brent forecast to $77.50 for 2026, projecting a 2.2 million b/d Q1 deficit and market balance in Q2 before H2 surplus. UBS overweighted energy on closed Strait of Hormuz and underinvestment, and Capital Economics sees $100 oil modestly slowing US GDP while boosting oil patch income.
1. Bank of America Raises 2026 Brent Forecast
Bank of America lifted its baseline Brent crude forecast to $77.50 per barrel for 2026 and warned of a 2.2 million barrels-per-day deficit in Q1 before a balanced market in Q2. It outlined three conflict duration variants that could sustain disruptions into later quarters, with a severe path pushing Brent to $130.
2. UBS Upgrades Energy to Moderately Overweight
UBS upgraded both energy and agriculture to moderately overweight, citing the closed Strait of Hormuz and structural underinvestment as drivers for upside. The bank highlighted backwardation in the oil curve, which could deliver roll gains, and pointed to rising emerging-market demand and net-zero ambitions as long-term supports for commodity prices.
3. Capital Economics’ Assessment of $100 Oil
Capital Economics sees sustained WTI around $100 as a modest headwind to real GDP growth, offset by stronger oil patch income that would bolster regional economies. It projects headline CPI rising to 3.3% by year-end under that path and expects the Federal Reserve to pause rate cuts unless prices surge toward $150.