Oil prices could fall into the $70s per barrel this year and slide further into the $60s in 2027, Julius Baer said, as rising Gulf supply offsets some geopolitical risks. Norbert Rücker, head of economics and next-generation research at Julius Baer, said oil market fundamentals point to a more comfortable supply outlook than earlier expected.
Political tensions between the US and Iran are adding a risk premium to prices. WTI and Brent settled at $82.40 and $88.52 a barrel on August 14, rising 1.42% and 1.67%, respectively. The gains followed attacks on oil ships near the Strait of Hormuz. Adnoc confirmed on August 15 that one of its vessels was attacked while sailing through the Strait of Hormuz on the evening of August 14. No injuries were reported, and the situation was brought under control.
The UAE oil company called for stronger protection of seafarers and maritime security. It also stressed the need to preserve freedom of navigation through the strategic waterway. Despite the security concerns, oil flows through Hormuz have largely continued. China and India have shown limited hesitation in buying Gulf crude, according to Julius Baer.
Rücker cited International Energy Agency and US Energy Information Administration data showing that global and US oil inventories have held up better than expected. Softer global demand has also helped balance the market. Southeast Asia could be seeing weaker consumption, although available data is still limited.
Rücker also pointed to an estimate of about nine million barrels a day moving through Hormuz. Some smaller vessels are operating without transponders, making their movements harder to track through standard shipping and satellite data. Strategic petroleum reserve releases have also reached around half of the volumes pledged in March.
Oxford Economics expects Gulf exports to recover gradually as producers use alternative routes and continue limited shipments through Hormuz. Higher bypass capacity could also reduce supply losses. A lasting Middle East peace deal could reopen shipping routes faster and push prices sharply lower. A fresh escalation could have the opposite effect by threatening energy infrastructure and maritime traffic.
The UAE is increasing crude exports through alternative routes and aims to reach five million barrels a day. Saudi Arabia is also shifting some oil shipments towards the Suez Canal as attacks by Houthis disrupt Red Sea routes. Julius Baer has kept its cautious stance on oil, with the bank holding a short position as it expects supply conditions to improve.