[Iran Crisis] UBS: Market Pricing Contradicts Energy Market Pressures, Oil Prices Could Reach $150 per Barrel in the Most Extreme Scenario

SocialAnxietyStaker · 2026-03-27T15:20:42+00:00

International oil prices have risen to $110 per barrel. UBS points out that the market's optimistic expectations for conflict resolution are at odds with energy pressures. If the crisis prolongs, it could trigger economic downside risks. UBS has outlined three scenarios, predicting the impact on oil prices and stock market performance, warning that high oil prices could significantly increase the destructive power on the economy.

SocialAnxietyStaker

2026-03-27 15:20:42

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International oil prices continue to rise, with Brent crude futures for May surpassing the $110 per barrel level, raising concerns in the market about the global economy and inflation expectations. However, UBS believes that the current market’s credit spreads are narrowing, profit forecasts have hardly been revised downwards, and capital continues to flow into global stock ETFs. This related optimistic pricing still reflects expectations that the conflict will be resolved soon, which is clearly in contrast to the actual pressures in the energy market, raising worries that an extended crisis could cause a larger impact.

Energy shock and tightening financial conditions could trigger economic downturn

The bank believes that if the crisis is prolonged, the cumulative effect of the energy shock and tightening financial conditions will trigger economic downturn risks, posing significant impacts on global investors.

UBS has set three scenarios for the conflict: (1) The conflict is resolved in early April, Brent crude prices briefly spike to $120 per barrel before retreating, with limited macro impacts, and the S&P 500 index is expected to rebound to 7150 points by year-end. (2) Oil prices peak at $130 per barrel, with global growth declining about 30 basis points compared to the benchmark, and the S&P 500 index drops to 6000 points in the second quarter before gradually recovering to around 6900 points by year-end.

The final scenario is (3) the conflict extends to the end of the third quarter, with Brent crude prices remaining around $150 per barrel for the year, global growth declining nearly 100 basis points compared to the benchmark, and the S&P 500 index potentially hitting 5350 points in the second quarter, not experiencing a real recovery until 2027.

The bank also mentioned that the destructive power of oil prices at $150 per barrel on the economy is about three times that of $100 per barrel; if the probability of recession increases by 20 percentage points, the impact could reach up to five times.

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