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From a mid-March peak close to $70/bbl, Brent crude dropped as much as 13% before a blockage of the Suez Canal prompted a bounce last week. As of 29 March, oil was still around 7% below the February peak of $70/bbl. In the view of strategists at UBS, the drop in oil prices is likely to be short-lived and forecast Bren Oil at $75/bbl in the second half of 2021.

Key quotes

“Vaccination progress has been uneven across countries. But in nations where vaccinations have been progressing more rapidly, reopening plans are more advanced. We believe this points to the direction of travel as laggards ramp up vaccination. As reopening progresses we expect oil demand to recover to 100mbpd later this year from current levels around 94mbpd.”

“Meanwhile, oil exporters remain committed to keeping supply constrained, and we expect OPEC+ to reduce production cuts only when demand recovers.”

“We believe the outlook for oil remains positive, and we expect Brent to rise to $75/bbl in the second half of the year.”