UBS Targets $105 Brent as Strait Blockage Persists

Brent and WTI: The Two Benchmarks at Risk

Brent crude is the most directly exposed to a strait closure. Any disruption in a major east-west transit route immediately tightens Brent availability. WTI responds indirectly through the Brent–WTI spread. The correlation is strong because physical crude markets are linked. If Brent tightens, WTI tends to follow, especially when U.S. crude exports are flowing. The price action in both contracts has already reflected a risk premium. The forward curve has steepened in backwardation for the front months, signalling that traders expect prompt barrels to remain scarce. UBS’s revised forecasts effectively validate that curve structure, implying that backwardation will persist until the strait reopens.

Traders should watch the physical spread between prompt and deferred contracts. If the backwardation starts to flatten, the market expects the restriction to end soon. If backwardation widens, the UBS call gains credibility. The other signal is tanker tracking data. Any sign that vessels are rerouting or that the restriction is easing would weaken the bullish case immediately.

The Next Signal: Strait Duration and the Curve

The single most important variable is the duration of the shipping restriction. Every week that the strait stays blocked reinforces the UBS thesis. The bank’s forecasts are not based on a permanent closure. They depend on a prolonged period of restricted flow. A rapid reopening would likely reverse the price spike as pent-up supply hits the market.

For a deeper look at how crude markets price these disruptions, see the crude oil profile and the broader commodities analysis section. The recent BMI forecast for Brent at $90 in 2026 also provides longer-term context – that analysis is covered in Weekly Oil Loss Masks BMI $90 Brent 2026 Forecast.

If the strait remains blocked past the next month, expect further upward revisions from other banks. If the restriction ends, the risk premium will collapse quickly. The demand weakness that UBS currently acknowledges will reassert itself as the dominant price driver. The next catalyst is any official statement on the strait’s status. Until then, the bullish supply-disruption narrative keeps the floor under prices.