UBS Maintains Buy Rating for Brazilian Petroleum, Lowers PT to $14.4

UBS Maintains Buy Rating for Brazilian Petroleum, Lowers PT to $14.4

July 02, 2025

UBS has maintained its buy rating for Brazilian Petroleum (PT) while lowering its price target to $14.4, reflecting a cautious outlook on the energy sector. The investment bank attributes this adjustment to recent developments in the global oil market and the strategic shifts within the Brazilian energy sector.

According to UBS, Brent crude oil prices are expected to remain in the upper half of the $60–$70 per barrel range in the near term, supported by a tight market and low OECD oil inventories [1]. However, UBS anticipates that demand will peak in August before easing slightly in the months ahead. On the supply side, South American output is rising, with Brazil reaching a new record high in production and the U.S. granting Chevron (NYSE:CVX) a license to resume operations in Venezuela, reducing the risk of further supply declines [1].

Petrobras (NYSE:PBR), Brazil's state-owned oil company, is also making strategic moves. The company is evaluating an investment in Brazilian sugar and ethanol producer Raizen as part of its strategy to re-enter the ethanol market [2]. This move is a potential reversal from Petrobras' previous strategic plan, which outlined a complete exit from biofuel production. Raizen, the world's largest sugar maker and a leading ethanol producer, is controlled by Shell (SHEL) and Brazilian conglomerate Cosan (CSAN). The potential entry of a new shareholder follows disappointing financial results that sent Raizen's shares to a record low in Brazil.

UBS's forecast sees the benchmark Brent crude at $62 by December 2025 and March 2026, before edging higher to $65 by mid-2026 [1]. This outlook is reinforced by data from the Joint Organisations Data Initiative (JODI), which flags the effect of extreme heat on Middle Eastern oil demand. In Saudi Arabia, direct crude use rose by 185,000 barrels per day in June, reaching 674,000 barrels per day, keeping Saudi exports steady despite some OPEC+ production cuts being unwound [1].

References:
[1] https://www.investing.com/news/commodities-news/ubs-projects-brent-crude-to-stay-toward-higher-end-of-6070-range-4206504
[2] https://seekingalpha.com/news/4486610-petrobras-considers-potential-investment-in-raizen-to-re-enter-ethanol-market-report