UBS lowers Brent crude end-2025 and March 2026 forecasts to $62/bbl on higher supply from South America and resilient output from sanctioned countries

UBS lowers Brent crude end-2025 and March 2026 forecasts to $62/bbl on higher supply from South America and resilient output from sanctioned countries

The Energy Information Administration (EIA) has released its latest Short-Term Energy Outlook (STEO) [1], projecting a significant drop in global oil prices over the coming months. The Brent crude oil price is expected to decline from $71 per barrel (b) in July to $58/b in the fourth quarter of 2025 (4Q25) and around $50/b in early 2026. This forecast is driven largely by more oil inventory builds following OPEC+ members’ decision to accelerate the pace of production increases.

According to the EIA, global oil inventory builds are now expected to average more than 2 million barrels per day (b/d) in 4Q25 and 1Q26, which is 0.8 million b/d more than last month’s STEO. The EIA anticipates that low oil prices in early 2026 will prompt production cuts from both OPEC+ and some non-OPEC producers, moderating inventory growth later in the year. The agency now forecasts the Brent crude oil price will average $51/b in 2026, down from the $58/b projected in July’s STEO.

In the U.S., crude oil production is projected to hit a record near 13.6 million b/d in December 2025 due to gains in well productivity. However, falling crude prices are expected to accelerate ongoing reductions in drilling and completion activity, pushing production down to 13.1 million b/d by 4Q26. On an annual basis, production is forecast to average 13.4 million b/d in 2025 and 13.3 million b/d in 2026.

Lower crude oil prices are also expected to push down retail prices for petroleum products. The EIA expects the price for retail gasoline across the U.S. to average less than $2.90 per gallon (gal) in 2026, about 20 cents/gal (6%) less than in 2025.

The EIA’s forecast aligns with other recent analyses. UBS has also lowered its Brent crude end-2025 and March 2026 forecasts to $62/bbl, citing higher supply from South America and resilient output from sanctioned countries [2]. Meanwhile, the International Energy Agency (IEA) expects global oil supply to rise by 2.5 million barrels per day (bpd) in 2025, up from 2.1 million bpd previously forecast [3].

References:
[1] https://www.eia.gov/outlooks/steo/
[2] https://www.ogj.com/general-interest/economics-markets/news/55309493/eia-forecasts-steep-drop-in-brent-crude-oil-prices-in-coming-months
[3] https://www.investing.com/news/commodities-news/global-oil-supply-to-rise-more-than-expected-in-2025--iea-4187445