UBS's latest House View report points out that Brent crude oil fell 16.4% last week, the largest weekly drop since April 2020, mainly due to rising expectations of negotiations between the US and Iran, and the market beginning to digest the possibility of reduced supply disruption risks in the Middle East. However, UBS believes that the decline in oil prices does not indicate that energy supply has returned to normal: global visible oil inventories were only about 7.8 billion barrels at the end of September, a decrease of more than 500 million barrels from February; shipping safety, insurance, and transportation costs around the Strait of Hormuz remain high, and at least 30 ship attacks occurred in the region in October. Therefore, UBS recommends that investors avoid simply betting on oil price movements and instead diversify their portfolios through commodities such as energy, gold, copper, and agricultural products to hedge against geopolitical risks and inflationary pressures.
