UBS Lowers Oil Price Forecasts for 2024-2026

Analysts at UBS have revised their oil price forecasts for 2024-2026, citing weaker global demand and a stabilized supply outlook.

Key Forecast Changes

• Brent Crude Price: Reduced for Q4 2024 from $83 to $75 per barrel, lowering the 2024 average price by $4 to $80 per barrel.
• Predictions for 2025 and 2026 also lowered by $5 to $75 per barrel.

Reasons for Changes

• The bearish outlook reflects slower economic growth, particularly in China.
• OPEC+ may delay unloading production cuts until 2027 or 2028, unlike earlier expectations for mid-2025.
• The market remains balanced with weak demand and stable non-OPEC+ supply growth.

Demand Growth Reductions

• Global oil demand growth for 2024 revised down by 0.1 Mb/d to 1 Mb/d, primarily due to China’s slowing economy.
• China’s oil demand growth forecast cut to 0.3 Mb/d for 2024, with GDP growth lowered to 4.6%.
• For 2025, UBS predicts demand growth of 1 Mb/d, while other agencies have a wider range.

Supply Insights

• Non-OPEC+ supply forecast revised up by 0.1 Mb/d for 2024 and 2025, especially from rising U.S. liquids production (projected growth of 0.6 Mb/d in 2024).
• Slowed U.S. crude production growth expected until Q1 2025 due to muted drilling activity.

Future Price Projections

• Oil prices likely to fluctuate between $65 and $85 per barrel for Brent.
• Prices may rise if demand exceeds expectations or OPEC+ remains firm on cuts, or geopolitical tensions escalate.
• A global recession could push prices into the $60s.

Long-term Outlook

• UBS sees modest global demand growth until the late 2020s with a significant slowdown expected thereafter.
• Factors influencing the slowdown include increasing fuel efficiency and rising electric vehicle adoption.
• By 2030, UBS predicts EV penetration will replace 3.4 Mb/d of oil consumption, a significant increase from 0.9 Mb/d in 2024.