Brent crude has risen again to around $115.00 per barrel, while Asian buyers are paying about $150.00 per barrel. UBS stated that the longer the conflict lasts, the greater the risk of energy infrastructure being targeted, which could push oil prices above the highs we saw in 2022.

In a note published on Thursday, the Swiss bank said that doubling energy costs could have a clear impact on the market if it continues. UBS noted that if prices reach $200.00 per barrel, a global transportation crisis could emerge.

The bank expects currency volatility to rise by 4 percentage points soon, reaching levels last seen during the COVID-19 pandemic in 2020 and the Ukraine war in 2022.

UBS adopts a selective approach to selling volatility in the near term, focusing on currency pairs that are trading at structurally attractive levels. The bank currently prefers the NZD/USD and EUR/NZD pairs.

Major central banks, including the Federal Reserve, the European Central Bank, the Swiss National Bank, and the Bank of Japan, kept interest rates unchanged this week while emphasizing greater uncertainty regarding growth and inflation.

UBS believes that central banks are currently ignoring the rise in oil prices, although this narrative is likely to change if energy prices remain high.