Swiss bank UBS raised its Brent forecast on 27 October. It now expects the benchmark to stay near $110 a barrel to the end of the year, up from $100. It cited volatile Middle East supply and geopolitical uncertainty.
In short, forecasters are catching up with the market. So how much of today’s price is war risk? This analysis gives a rough answer.
The Brent forecast against the pre-war price
On 26 October, the IEA said Brent was about 59% above its pre-war level. On that basis, the pre-war price was ~$73, on our estimate. Brent traded at $114.81 on 27 October, down $1.00 on the day. As a result, oil costs ~$42 a barrel more than before the war.
In effect, UBS’s new $110 call implies that most of that gap stays until year-end. In other words, about a third of the price is war risk. Moreover, UBS does not expect it to go soon.
Why the risk premium is sticky
To be sure, traffic through the Strait of Hormuz has risen, UBS said. Yet attacks on ships have increased too. In fact, October has been the worst month for attacks on shipping in the area, a think tank’s data show. On top of that, the Houthis said on 27 October they had hit Ras Tanura, Saudi Arabia’s biggest refinery. There was no Saudi confirmation.
Similarly, SEB said prices carry a significant risk premium for a possible US or Israeli attack on Iran. Meanwhile, talks in Tehran between Iran, Saudi Arabia, Turkey and Pakistan pulled prices lower on both 26 and 27 October.
What could move the Brent forecast again
In our view, the premium falls only if two things happen. First, attacks on Saudi sites must stop. Second, shipping through Hormuz must return close to normal. Until then, dips are likely to draw buyers, as PVM analysts said on 26 October.
For a longer view of the premium, see our analysis of Brent at $110.
What to watch next
- The Tehran talks, and whether they lead to a ceasefire.
- Saudi confirmation of the Ras Tanura claim.
- The majors’ Q3 results on 29 and 30 October, for their price assumptions.
For the news, read our report on the UBS call.
Sources
- Reuters via Euronext, Oil falls as Middle East talks outweigh concern over fresh strikes, 27 October 2026: live.euronext.com
- Reuters via Investing.com, Oil slips but stays near six-month highs on Saudi attacks (PVM comment), 26 October 2026: investing.com
- CNBC, Oil today: Iran, US, crude, WTI, Brent, Trump, 27 October 2026: cnbc.com
- Reuters via The Star, IEA’s Birol does not expect energy markets to return to pre-war levels in 2027, 26 October 2026: thestar.com.my
