US-Israel-Iran war: UBS flags front-end oil spike as 20% global supply chokepoint threatened
Natural gas markets are also vulnerable. UBS expects global benchmarks — JKM, TTF and Henry Hub — to move higher. The risk stems from the potential disruption of Qatar’s 77 million metric tonnes per annum (mtpa) LNG supply, which is projected to rise to 110 mtpa with new capacity in the second half of 2026.
- Mar 1, 2026,
- Updated Mar 1, 2026 5:08 PM IST
Global oil and gas markets are bracing for sharper volatility after military action involving the US, Israel and Iran, with UBS warning of immediate upside risks to crude and gas prices.
In a note titled “Initial Sector Impacts from US/Israel-Iran Military Action” dated February 28, 2026 , UBS said it expects crude oil prices “to increase across the entire curve, with the biggest move higher in the front end.”
Follow live coverage of US-Israel-Iran war here
The biggest risk centres on the Strait of Hormuz, a key chokepoint through which around 20% of global oil supply flows. UBS flagged early indications of ships avoiding the region amid military activity on both sides of the Strait. Potential damage to oil infrastructure, including roughly 3.3 million barrels per day (mmbpd) of Iranian supply, could further tighten markets.
An offset may come from OPEC+, which could respond faster than its typical 137,000 barrels per day monthly increases. Higher prices could also incentivise additional non-OPEC supply, though UBS noted that such output would likely take longer to materialise.
Natural gas markets are also vulnerable. UBS expects global benchmarks — JKM, TTF and Henry Hub — to move higher. The risk stems from the potential disruption of Qatar’s 77 million metric tonnes per annum (mtpa) LNG supply, which is projected to rise to 110 mtpa with new capacity in the second half of 2026. In addition, much of Middle East LNG pricing is linked to Brent crude, meaning higher oil prices could translate into firmer gas prices.
While US LNG capacity is expanding, including the imminent start-up of the 18.1 mtpa Golden Pass facility, UBS cautioned that there are limits to how much additional US exports can cushion global markets.
Across subsectors, UBS expects US exploration and production (E&P) stocks to react positively, with small- and mid-cap, more leveraged oil names likely to outperform. Gas-focused E&Ps could also rise, though oil producers are expected to lead.
Global oilfield services (OFS) companies may see gains if higher prices persist and spur increased domestic activity in North America. However, potential infrastructure damage in the Middle East could weigh on equipment in the region.
Among integrated oil companies, Canadian majors are viewed as well positioned to benefit from higher crude prices. In Europe, stocks with greater oil leverage and limited Middle East exposure could see the strongest near-term reaction. For MENA players, the impact will hinge on the scale of infrastructure damage and any further escalation.
Refining and midstream names exposed to crude flows could outperform, UBS said. In Europe, jet fuel margins may see the biggest impact, as more than 30% of total imports pass through the Strait. Diesel and gasoil margins are also likely to tighten, though the exposure is smaller at roughly 10% of imports.
UBS underscored that the outlook remains highly sensitive to the scale and duration of disruption, as well as any coordinated supply response.
Global oil and gas markets are bracing for sharper volatility after military action involving the US, Israel and Iran, with UBS warning of immediate upside risks to crude and gas prices.
In a note titled “Initial Sector Impacts from US/Israel-Iran Military Action” dated February 28, 2026 , UBS said it expects crude oil prices “to increase across the entire curve, with the biggest move higher in the front end.”
Follow live coverage of US-Israel-Iran war here
The biggest risk centres on the Strait of Hormuz, a key chokepoint through which around 20% of global oil supply flows. UBS flagged early indications of ships avoiding the region amid military activity on both sides of the Strait. Potential damage to oil infrastructure, including roughly 3.3 million barrels per day (mmbpd) of Iranian supply, could further tighten markets.
An offset may come from OPEC+, which could respond faster than its typical 137,000 barrels per day monthly increases. Higher prices could also incentivise additional non-OPEC supply, though UBS noted that such output would likely take longer to materialise.
Natural gas markets are also vulnerable. UBS expects global benchmarks — JKM, TTF and Henry Hub — to move higher. The risk stems from the potential disruption of Qatar’s 77 million metric tonnes per annum (mtpa) LNG supply, which is projected to rise to 110 mtpa with new capacity in the second half of 2026. In addition, much of Middle East LNG pricing is linked to Brent crude, meaning higher oil prices could translate into firmer gas prices.
While US LNG capacity is expanding, including the imminent start-up of the 18.1 mtpa Golden Pass facility, UBS cautioned that there are limits to how much additional US exports can cushion global markets.
Across subsectors, UBS expects US exploration and production (E&P) stocks to react positively, with small- and mid-cap, more leveraged oil names likely to outperform. Gas-focused E&Ps could also rise, though oil producers are expected to lead.
Global oilfield services (OFS) companies may see gains if higher prices persist and spur increased domestic activity in North America. However, potential infrastructure damage in the Middle East could weigh on equipment in the region.
Among integrated oil companies, Canadian majors are viewed as well positioned to benefit from higher crude prices. In Europe, stocks with greater oil leverage and limited Middle East exposure could see the strongest near-term reaction. For MENA players, the impact will hinge on the scale of infrastructure damage and any further escalation.
Refining and midstream names exposed to crude flows could outperform, UBS said. In Europe, jet fuel margins may see the biggest impact, as more than 30% of total imports pass through the Strait. Diesel and gasoil margins are also likely to tighten, though the exposure is smaller at roughly 10% of imports.
UBS underscored that the outlook remains highly sensitive to the scale and duration of disruption, as well as any coordinated supply response.