Crude oil at $80 or above $100: Where does UBS see prices from here?

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Brent crude could fall to around $80 a barrel by the end of the year if the West Asia crisis finds a resolution, and average around $75 a barrel through calendar year 2027, according to Rwibhu Aon, Energy Analyst at UBS India. Speaking from the sidelines of the UBS India conference,

Aon said this outlook rests on higher expected production from the UAE and Latin American countries, along with demand moderation in China.

If the crisis persists, the picture looks very different. Aon said the world is currently losing an estimated 5 to 6 million barrels a day of production, with around 2 billion barrels of oil disrupted since the crisis began. "If the crisis continues, we see further inventory drawdowns," he said, adding that oil prices could sustain above $100 a barrel over the next two to three quarters if hostilities in West Asia continue.

On the near-term outlook for oil marketing companies, Aon said the losses already visible in the April-June 2026 quarter cannot continue indefinitely. "If we see oil prices sustain above $100 per barrel, the oil marketing companies cannot sustain the losses for multiple quarters," he said, pointing to the likelihood of price hikes or excise duty relaxation from the government in the coming quarters. He added that the government has historically waited to see where oil prices settle before reacting, calling it a longer-term risk rather than a near-term one.

India's crude sourcing has held up despite the volatility. Aon said the country has diversified its supply well enough that there is no shortage of oil products domestically. He said oil marketing companies are currently paying a premium over benchmark crude prices, in the mid to high single digits, though this is down from the elevated premiums and freight rates seen around March and April, when the West Asia crisis began roughly six months ago.

Aon said UBS favours the upstream oil and gas space, which benefits from higher oil and gas realisations during periods of geopolitical stress. He also flagged gas utilities as a preferred space. Despite near-total disruption of cargoes through the Strait of Hormuz, India's LNG (liquefied natural gas) shipment volumes are higher year-on-year, helped by diversified sourcing from the United States and West African countries.

City gas distribution companies present a more mixed picture. Aon said these companies are seeing high single-digit to low double-digit volume growth, driven by rising CNG (compressed natural gas) vehicle additions following last year's GST cuts and government-led conversions from LPG to piped natural gas (PNG). However, with spot LNG prices above $20 per mmbtu, oil-linked gas costs have risen, squeezing margins. "We are more positive on the gas utilities than the city gas companies," Aon said.

For the full interview, watch the accompanying video

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