UBS has significantly reduced its oil price forecast this year, joining several other Wall Street Banks, where President Donald Trump’s global tariff system has softened crude demand this year. UBS expects US crude to trade at $64 as it cuts its global benchmark Brent outlook from $12 per barrel to $68, with economic growth expected to slow down. But the trade war could escalate further, leading to a deeper recession in the US and a fierce landing in China, commodity analyst Giovanni Staunovo told clients in a memo on Monday. In this scenario, Brent could fall from $40 to $60 per barrel, Staunovo writes. “With these risks in mind, we are currently on the sidelines with new investment opportunities,” Staunovo said. UBS previously saw the opportunity to sell the downside risks of crude oil, but now recommends that investors hold these positions until they mature. UBS believes independent exploration companies and production companies are the most exposed with its top stock picks with oil prices. However, compared to other industries, banks believe the impact of higher tariffs on the US energy sector is below average. “We don’t expect the industry to offset all impacts, but we’re looking at the industry’s continued success in increasing efficiency and productivity that could partially offset the impact,” UBS equity strategist James Dobson told clients in a memo on Monday. UBS considers large, integrated oil and gas companies as the best defense against sophisticated price declines. Because their business is diversified across refinements and chemicals, reducing revenue sensitivity to a volatile commodity market. Dobson said the bank’s top consolidation pick is exon as the company’s strong balance sheet and diverse operations are isolated from product prices. Exxon’s cost-cutting program also strengthened its financial results, he said. “Based on our oil price outlook, Exxon appears to be positioned to cover capital expenditures, dividends and stock repurchases in 2025 and 2026 in cash flow,” Dobson said. Exxon also offers opportunities in future industries such as carbon capture, clean electricity and hydrogen, he said. Exxon Mobil’s shares are down about 3% per year, but that’s not down more than the broader market. The S&P 500 index has dropped by 7.8% so far in 2025. COPYTD Mountain Mountain Conocophillips Stock Performance Conocophillips recorded a decline of around 13% per year, the highest of UBS’s exploration and production names. UBS prefers stocks that prefer further inventory in natural gas, as commodities are expected to play a key role in electrifying the economy. Konoko has the opportunity for liquefied natural gas to strengthen its prospects, Dobson said. Conoco’s low-cost operation makes it one of the best cash flow generators in the industry, analysts say. “We consider the cos as core energy retention and we think management is above average,” Dobson said. “We also believe that the company is positioned very well.” Get tickets for Pro Live Join us on the New York Stock Exchange! An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange. Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we encourage you to take part in the first exclusive, in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th. Join ProSCarter Worte, an interactive pro clinic led by Dan Niles and Dan Ives, along with a special edition of Pro Talks with Tom Lee. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!
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