Brent On Track For Worst Week Since COVID, But UBS Warns Bears: "Fundamentals Still Provide A Floor" Brent crude futures are on track for their largest weekly decline since the week ending April 24, 2020 , during the early COVID-19 pandemic era, on the prospect that a Democratic sweep could end the US-Iran conflict.
UBS energy expert Dominic Ellis wrote in a note earlier that the collapse in crude's war risk premium reflects the prospects for peace and the potential for the Strait of Hormuz to fully reopen. But those hopes are colliding with the harsh reality that replenishing depleted global oil stockpiles could take considerable time.
Brent's $20 plunge over the last several days reflects a massive unwinding of the war risk premium rather than a meaningful improvement in supply and demand, Ellis said. He estimates that another $10 to $15 of premium remains embedded in crude near $95, leaving more room for downside if further diplomatic signals emerge from the Gulf.