Australian Energy Sector Update "Oil & LNG prices: A path to..."

Research evidence excerpt

Australian Energy Sector Update "Oil & LNG prices: A path to..."

Global Research

2 July 2026ab

Australian Energy Sector Update Equities

AustraliaOil & LNG prices: A path to normalisation

Energy

Tom Allen

Cut to oil over 2026-27 prompted by uplift in flows following US-Iran MoU Analyst

The recent US-Iran MoU & resulting uplift in oil flows via the Strait of Hormuz have tom.allen@ubs.com

prompted a cut to our near-term oil price forecasts. We cut Brent -$25/bbl in 3Q26 to +61-3-9242 6237

$80/bbl, -$10/bbl in 4Q26 to $80/bbl; coupled with a -$10/bbl cut to 2027 to $75/bbl. Maike Baumeister

Since the MoU, oil transits through the Strait have recovered to ~50% of pre-conflict Analyst

levels, with Iranian crude also regaining momentum as the US blockade eases. Despite maike.baumeister@ubs.com

this, we believe it is premature to assume a full normalisation, & see price risk skewed to +61-3-9242 6853

the upside noting that inbound tankers to the Persian Gulf have lagged outbound Harry Glass

tankers 2:1 recently, highlighting the risk of a slip in exports in lieu of a material uptick in Associate Analyst

Gulf loadings. We expect normalisation to be gradual. Despite inventories moving harry.glass@ubs.com

below the lower end of the five-year range creating potential storage restocking +61-3-9242 6053

demand that can support prices in 2027, we now expect lower restocking volumes than

previously. Our LT prices remain unchanged at $75/bbl beyond 2028. The recent unwind

in geopolitical risk premium in oil prices is also playing out in LNG, so we also trim our

2H26 JKM LNG prices to$17.5/mmbtu (from $22/mmbtu) and 2027 JKM LNG to $13/

mmbtu (from $14.5/mmbtu). Find our global oil research here.

China remains the key swing buyer in global oil markets