UBS Flags Two Oil Scenarios as Hormuz Shipping Stalls, Gold Seen Surging

The oil market is now navigating between two extreme scenarios, depending largely on how the war in the Middle East evolves and whether shipping through the Strait of Hormuz can resume.

Gold, by contrast, appears to have a much clearer upside trajectory. According to Giovanni Staunovo, strategist at the Chief Investment Office of UBS Global Wealth Management, the precious metal is likely to regain its role as a key geopolitical hedge for investors and central banks, with prices potentially rising as high as $6,200 per ounce by June 2026.

Strait of Hormuz at the center

Roughly 20 million barrels of crude oil and refined products normally transit the Strait of Hormuz each day, making it one of the world’s most critical energy chokepoints. However, heightened security concerns for shipping have dramatically reduced traffic.

As Staunovo tells Naftemporiki, currently only two to three tankers cross the strait daily, compared with the usual 30 to 35 vessels before the crisis.

Tanker loadings have continued for now, but the challenge is shifting toward storage.

“Once available tankers are loaded, the focus will shift to domestic storage,” he notes.

Production shut-ins likely

Limited storage capacity is already beginning to create problems for some producers. According to the UBS strategist, Iraq’s extremely constrained storage capacity has already forced the country to shut in a substantial portion of its production, with further shut-ins likely.

There are also indications that Kuwait is gradually curbing production for similar reasons, according to media reports.

By contrast, the region’s two largest producers — Saudi Arabia and the United Arab Emirates — have greater storage capacity as well as alternative transport routes.

Saudi Arabia has already increased crude shipments via the East–West pipeline to the Red Sea port of Yanbu.

For the UAE, however, it remains unclear whether the attack on the port of Fujairah has disrupted flows through its bypass pipeline.

“The bottom line is that the longer the Strait stays virtually closed, the more production shut-ins will materialize,” Staunovo says to Naftemporiki.

Declining inventories and fears of scarcity

Outside the Gulf, the market has already begun drawing down “oil on water” — crude stored on tankers — as only limited volumes continue to flow out of the region.

The reduced supply is fueling concerns about potential shortages. Options to offset the disruption remain limited.

One possible response would be the release of strategic petroleum reserves, but Staunovo cautions that their impact would be modest compared with the potential scale of the supply disruption if the Strait remains closed for an extended period.

In such a scenario, oil prices would continue rising until higher prices eventually destroy demand.

When oil prices could fall again

A relatively rapid end to hostilities and the restoration of normal shipping through the Strait of Hormuz could trigger a sharp decline in prices, the UBS strategist says.

Even in that scenario, however, prices would likely remain above pre-conflict levels, as it would take time for production and exports to fully recover.

Gold: a temporary pause before the rally
Despite the geopolitical escalation, gold prices have not yet delivered the strong gains many investors expected.

A stronger US dollar, expectations of potential interest-rate hikes and investor profit-taking have all contributed to weaker-than-expected performance during a period of geopolitical turmoil. Prices fell on Monday before staging a modest rebound on Tuesday.

Staunovo nevertheless expects gold to soon reclaim its role as a safe-haven asset.

Historically, the precious metal has provided protection against the monetary and financial consequences of wars, he notes.

UBS also expects lower real yields and growing concerns about rising global debt levels to support continued demand from both central banks and investors.

Based on these factors, the bank projects that gold prices could climb to $6,200 per ounce by June 2026.