After a brief spike above $81/bbl following U.S. airstrikes on Iranian nuclear sites, Brent crude prices have reversed sharply, settling at $68.4/bbl by June 24. This movement reflects a fast fade in geopolitical risk premium after Iran's limited retaliation and subsequent declarations of a conditional ceasefire between Tehran and Tel Aviv.
Despite rising concerns, oil flows through the Strait of Hormuz remained uninterrupted. Markets quickly recalibrated, dismissing the scenario of near-term supply disruption. According to UBS, the pricing dynamics this week were driven almost entirely by sentiment, not fundamentals.
That said, the market remains structurally tight. Inventories are low, OPEC+ is holding spare capacity in reserve, and investment in new upstream projects has lagged. However, with geopolitical pressure easing, attention is turning to medium-term indicators – and they suggest potential softening.
UBS notes that the Brent futures curve, while still downward sloping (backwardated), has become less steep compared to earlier in the week. This flattening indicates a cooling of immediate supply concerns and a market that expects relative stability ahead.
At the same time, Iran’s parliament has approved a bill to halt cooperation with the International Atomic Energy Agency – a development that may resurface geopolitical tensions in the months ahead. While Iran hasn’t withdrawn from the Non-Proliferation Treaty yet, market participants are watching closely.
On the supply side, U.S. shale producers have responded with increased hedging activity rather than ramping up drilling. This may help maintain output over the coming quarters, potentially offsetting tightness in other regions. The outlook for global supply, therefore, remains more balanced than just a few days ago.
UBS maintains its base case for Brent crude at around $68 through mid-2026. The table below summarizes the current forecast:
Despite rising concerns, oil flows through the Strait of Hormuz remained uninterrupted. Markets quickly recalibrated, dismissing the scenario of near-term supply disruption. According to UBS, the pricing dynamics this week were driven almost entirely by sentiment, not fundamentals.
That said, the market remains structurally tight. Inventories are low, OPEC+ is holding spare capacity in reserve, and investment in new upstream projects has lagged. However, with geopolitical pressure easing, attention is turning to medium-term indicators – and they suggest potential softening.
UBS notes that the Brent futures curve, while still downward sloping (backwardated), has become less steep compared to earlier in the week. This flattening indicates a cooling of immediate supply concerns and a market that expects relative stability ahead.
At the same time, Iran’s parliament has approved a bill to halt cooperation with the International Atomic Energy Agency – a development that may resurface geopolitical tensions in the months ahead. While Iran hasn’t withdrawn from the Non-Proliferation Treaty yet, market participants are watching closely.
On the supply side, U.S. shale producers have responded with increased hedging activity rather than ramping up drilling. This may help maintain output over the coming quarters, potentially offsetting tightness in other regions. The outlook for global supply, therefore, remains more balanced than just a few days ago.
UBS maintains its base case for Brent crude at around $68 through mid-2026. The table below summarizes the current forecast:
Bottom line: The oil market has stabilized quickly, pricing out short-term geopolitical fears. While some risk premium may persist, particularly tied to Iran’s nuclear trajectory, the focus has shifted back to physical supply and demand. Barring new escalations, Brent appears set to trade in a stable range – anchored by cautious optimism and tempered fundamentals.
