Brent climbed back over $85/bbl, paring losses from earlier this week and trading at close to the highest levels since mid-April. Oil's rally can go further, in the view of economists at UBS.

Oil markets to remain in deficit, pushing up prices

Given the constructive forces we see for crude in the coming months, we remain positive on Oil and continue to expect prices to rise to $90/bbl by end-2023 amid demand-supply mismatches.

On the demand side, prospects remain solid. Oil demand has been robust at above 102 million barrels per day in July, and is set to breach 103mbpd in August for the first time.

We expect supply to remain tight in the coming weeks, given the extension of Saudi and Russian-led production and export cuts. Libya also remains a wildcard, with some political stakeholders threatening to stop production in September if their requests are not met.

In our view, the result of this supply-demand picture is likely to be a market deficit of around 2mbpd in July and August, versus around 0.7mbpd in June.