UBS slashes oil forecast, says these stocks are best positioned
UBS has slashed its oil price forecast this year, joining several other Wall Street banks that see crude demand softening this year due to President Donald Trump ‘s global tariff regime. UBS cut its outlook for global benchmark Brent by $12 to $68 per barrel and expects U.S. crude oil to trade at $64 as economic growth is expected to slow. But there is a risk that the trade war could escalate further, causing a deeper recession in the U.S. and a hard landing in China, commodity analyst Giovanni Staunovo told clients in a Monday note. In this scenario, Brent could fall to between $40 and $60 per barrel, Staunovo wrote. “Considering these risks, we’re staying on the sidelines at present with new investment opportunities,” Staunovo said. UBS previously saw an opportunity in selling crude oil’s downside risk, but is now recommending that investors hold these positions until they mature. Top stock picks With oil prices under pressure, UBS sees independent exploration and production firms and the oilfield services companies as the most exposed. Compared with other industries, however, the bank believes the impact of higher tariffs on the U.S. energy sector is below average. “Though we do not expect the industry can offset all of the impact, we note the industry’s ongoing success of increasing efficiency and productivity which could partially offset the impact,” James Dobson, an equity strategist at UBS, told clients in a Monday note. UBS views the big, integrated oil and gas companies as the best defense against falling crude prices because their business is diversified across refining and chemicals, reducing the sensitivity of their earnings to the volatile commodity market. The bank’s top integrated pick is Exxon due to the company’s strong balance sheet and diversified operations that help insulate it from commodity prices, Dobson said. Exxon’s cost-cutting program has also enhanced its financial results, he said. “Based on our oil price outlook, Exxon appears to be positioned to cover its capital spending, dividends, and share repurchases with cash flow in 2025 and 2026,” Dobson said. Exxon also offers opportunities in future industries such as carbon capture, clean electricity and hydrogen, he said. Exxon Mobil shares are down about 3% year to date, but that’s less of a decline than the broader market. The S & P 500 Index has fallen 7.8% so far in 2025. COP YTD mountain ConocoPhillips stock performance ConocoPhillips , which has logged a nearly 13% decline year to date, is UBS’ top pick among exploration and production names. UBS prefers stocks that have more exposure to natural gas because the commodity is expected to play a key role in the electrification of the economy. Conoco has opportunities in liquefied natural gas that augment its outlook, Dobson said. Conoco’s low-cost operations make it one of the industry’s best generators of cash flow, the analyst said. “We view Conoco as a core energy holding and believe management is above average,” Dobson said. “We also believe that the company is exceedingly well-positioned.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
