UBS Bank confirmed in its report published today, Thursday, that global oil prices may experience temporary fluctuations due to new U.S. and European sanctions imposed on Russian energy companies, but it ruled out that this will lead to a sustained rise in prices, pointing out that markets are still suffering from a supply surplus.
UBS explained that the impact of sanctions on Russian oil will be limited, as Moscow remains capable of finding alternative channels for exporting crude beyond Western restrictions. The bank added that previous experiences have shown the market's ability to absorb geopolitical shocks quickly, supported by increased production from some producing countries.
The report indicated that Brent crude prices are likely to remain within a range of $60 to $70 per barrel in the coming period, amid a fragile balance between supply and demand. The bank affirmed that this price range reflects the current economic reality, where inventory levels remain high in some areas, while the pace of demand is slowing due to global growth deceleration.
UBS anticipated that markets will continue to monitor the implementation of new sanctions and their effect on Russian supplies, recommending investors to follow the movements of major producers such as Saudi Arabia and the United States, which may intervene to adjust production levels if prices rise unsustainably. It also pointed out that political factors, particularly tensions between the West and Russia, could lead to short-term price increases without changing the overall market trend.
The bank concluded its report by emphasizing that the oil market is entering a new phase of caution and balance, where both economic sanctions and global energy policies are playing an increasingly significant role in shaping future prices.
UBS explained that the continuation of geopolitical tensions with Russia will keep markets in a state of constant vigilance, but oil will remain within a limited range supported by global production and inventory measures, making control over prices more reliant on political understandings than on economic indicators.
