(UBS)
While CIO expects this threat to weigh on oil exports from the country, we do not expect a complete halt—about 40% of the dark fleet loading crude oil from Venezuela is under US sanctions, and the US continues to import from the country.
Earlier this week, oil prices fell amid weak investor sentiment and sluggish economic data coming out of China. Optimism over a potential peace deal between Russia and Ukraine also contributed to the drop, as the Trump administration reportedly offered strong “Article 5-like” security guarantees to Ukraine in the latest negotiations. Ukrainian President Volodymyr Zelenskyy said he has an agreement with the US to make security guarantees legally binding through a vote in Congress, while Russian President Vladimir Putin has yet to make any official response. Russian Deputy Foreign Minister Sergei Ryabkov, meanwhile, reiterated that Moscow’s territorial demands remain unchanged.
Peace between Russia and Ukraine is unlikely to add much crude oil to global supply in the near to medium term, in our view, and we retain a constructive price outlook in the coming year. In fact, a likely recovery in oil prices in the second half of next year underpins our Attractive view on commodities overall.
Improving demand and stalling supply growth are likely to push oil prices higher. While we do see the oil market in a surplus at present, we believe oil prices will be supported by rising oil demand, stalling non-OPEC+ supply in the second half of 2026, and dwindling OPEC+ spare capacity. In our view, the current prevailing surplus will diminish throughout 2026 and might move into a deficit in 2027, supporting prices in the latter half of next year. We forecast global oil demand to grow by approximately 1.2mbpd in 2026, while non-OPEC+ supply is expected to increase by around 0.8mbpd. Our price forecast for Brent is USD 67/bbl by the end of next year.
Strong demand should further support copper and aluminum in a deficit market. Copper prices have been supported by supply disruptions this year, and we think supply-side risks will likely persist into 2026. Meanwhile, copper remains vital to the global economy, supporting electrification and growth across sectors. Major economies’ shift toward renewable energy, along with emerging demand from data centers, is likely to drive strong, long-term copper demand. Similarly, we see a deficit in the aluminum market next year, with demand supported by continued strength in energy transition sectors.
Agriculture offers an attractive entry point, while gold remains an effective portfolio diversifier. Grains are expected to enter a mild tightening phase in 2026-27, driven by slower area growth in the US and Brazil and sustained demand. Soft commodities are likely to be supported by ongoing supply-side constraints and persistent distribution tightness. While investors should monitor risks related to La Niña, which may introduce volatility in the coming months, these supply dynamics suggest limited downside risk and potential opportunities for selective exposure within the sector. For gold, we continue to view it as an effective portfolio diversifier, and believe that elevated debt and geopolitical uncertainty would bolster demand.
So, while commodities may face periodic volatility, we believe they can play a valuable role in portfolios. Investors can access commodities through diversified indices, exchange-traded funds (ETFs), or structured investments, provided they are aware of unique risks such as price swings and costs associated with futures or physical holdings.
Original report – Oil rises on fresh geopolitical uncertainty, 17 December 2025.
