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UBS analysts have warned that geopolitical tensions between the US and Iran could push oil prices to $90 per barrel if the conflict persists. The report highlights that prolonged instability in the Persian Gulf, a critical region for global oil supply, could disrupt production and trigger a supply shock. Current oil prices are trading near $85, with UBS citing potential shutdowns of key oil infrastructure in the Strait of Hormuz as a major risk. The firm also noted that OPEC+ production cuts and reduced US shale output could exacerbate the supply-demand imbalance. For markets, this scenario represents a significant upside risk for energy commodities, particularly crude oil and natural gas. Traders should monitor developments in US-Iran relations, including sanctions enforcement and military posturing, which could rapidly shift market sentiment. The analysis also underscores the vulnerability of global energy markets to geopolitical flashpoints, with oil prices likely to remain volatile in the near term. Investors in the Gulf and MENA region should pay close attention to how higher oil prices impact local economies, given the region's reliance on energy exports. Central banks in oil-producing nations may adjust monetary policies to manage inflationary pressures. Traders should also watch for OPEC+ policy updates and any unexpected shifts in US energy production. The key technical level to monitor is $85, with a breakout potentially confirming the bullish outlook.
