UBS(US:UBS)2025-06-27 02:04Investment Rating - The report does not explicitly provide an investment rating for the oil industry but indicates expectations for rising oil prices due to geopolitical tensions [1][2]. Core Insights - Oil prices are expected to rise further following US strikes on Iranian nuclear facilities, with Brent crude potentially reaching the $80s per barrel [1]. - There is significant uncertainty regarding oil prices in the coming weeks, primarily dependent on Iranian retaliation and its impact on regional oil supply [2]. - The probability of a closure of the Strait of Hormuz is considered low, but it remains a critical focus due to its importance in global oil and LNG transit [3]. - Current oil flows through the Strait of Hormuz remain stable, with Iranian oil production at approximately 3.3 million barrels per day and exports at around 1.7 million barrels per day [4]. Summary by Sections Geopolitical Impact - US military actions against Iran are likely to increase oil prices due to heightened risk perceptions regarding supply disruptions in the region [1][2]. - Iranian retaliation could either escalate tensions or remain contained, influencing future oil price movements [2]. Market Dynamics - The closure of the Strait of Hormuz, while low probability, could lead to significant disruptions in global oil markets, potentially pushing prices above $120 per barrel [3]. - OPEC+ is expected to increase production by 411,000 barrels per day in August, which may limit the upside risk for oil prices [4]. Current Production and Exports - Iranian oil production and exports have not been significantly affected by recent geopolitical events, maintaining steady levels [4].