Brent crude oil reached USD 112 per barrel for the first time since May and is on track for a third consecutive week of gains, according to the UBS Chief Investment Office's daily market commentary published on 22 October 2026. Brent has risen 9.4% since the start of October as fresh attacks in the Middle East have raised concerns about further disruptions to energy supplies. Saudi Arabia reported attacks on an Aramco oil field and an airport in its Eastern Province, while the United States ordered diplomats to leave the country amid Houthi strikes.
Separately, the New York Times reported that the US and Israeli militaries had developed specific plans for renewed attacks on Iran after the US midterm elections, scheduled for 3 November. The Russia-Ukraine conflict also continues. UBS notes that geopolitical risks are unlikely to subside in the near term, which keeps inflation concerns elevated and adds to macroeconomic uncertainty.
UBS also points to supply-side adjustments. According to the Organization of the Petroleum Exporting Countries (OPEC) latest Monthly Market Report, OPEC crude production rose by 0.92 million barrels per day in September to 25.1 million barrels per day, or around 85% of February's output, though it remains below pre-war levels. Trade routes are also shifting, and a G7 decision to release additional emergency oil stocks should provide some temporary relief.
UBS acknowledges that the physical oil market remains tight and vulnerable to further supply shocks, but its base case is that a gradual recovery in energy flows and production should allow oil prices to moderate into next year. UBS argues that investors should focus less on short-term drawdowns linked to geopolitical events and more on ensuring their portfolios can withstand volatility. The bank cites historical data showing that the S&P 500 has been higher 12 months after the start of a geopolitical crisis roughly three-quarters of the time since 1941.
Resilient economic growth, robust corporate earnings and strong AI demand also continue to support equity gains, according to the report. UBS suggests that energy and broad commodity exposure can help manage supply-driven volatility and improve diversification. The bank cites rising power demand, AI infrastructure investment, electrification and constrained supply as factors supporting a commodity upcycle, and notes that commodities have historically shown low correlations with traditional asset classes.
UBS maintains a constructive market outlook and recommends broadly diversified equity exposure across sectors and regions, complemented by fixed income, broad commodities and select alternatives, depending on each investor's risk tolerance, liquidity needs and financial objectives. Source: UBS Global, Chief Investment Office, CIO Daily Update, 22 October 2026. The report cites the OPEC Monthly Market Report and a New York Times report.
Source: ubs.com