UBS's oil and gas team, led by economist Arend Kaptyen, says global oil stocks have declined to levels that could soon test historical lows, increasing the chances of sharp price moves and tangible supply disruptions.
In a note published Wednesday, the bank estimated inventories at about 8.2 billion barrels at the end of February. That figure has since come down to roughly 7.8 billion barrels by the end of April, placing stocks close to the lower bound of the past decade's range. UBS now expects inventories to approach an all-time low near 7.6 billion barrels by the end of May.
UBS said the arrival of that milestone has been pushed back by about one month compared with the bank's earlier forecast. The delay, the note explains, reflects three temporary mitigating factors: demand destruction, releases from strategic petroleum reserves and waivers granted on Iranian and Russian oil in transit. Together, those influences have softened the pace of inventory draws for the moment.
But UBS warned that those buffers are running out. "Buffers have now largely been exhausted," the analysts said, signaling that the temporary protections that delayed deeper stock declines are dissipating.
The bank also pointed out that the immediate effects of lost supply have primarily appeared in non-OECD nations, where real-time data can be less complete and reliable. UBS cautioned, however, that the stress on inventories is increasingly likely to surface in wealthier economies, including the United States, where higher-frequency reporting provides a clearer picture of supply conditions.
As available stocks tighten further, UBS expects oil prices to grow "increasingly convex and volatile." The note highlighted a particular risk scenario: if physical dislocation intensifies and the Strait of Hormuz remains closed, there is a "risk of panic buying," which would add further strain to global energy systems already under pressure.
UBS suggested this dynamic could align with Tehran's strategic interests. The bank noted that the longer Iran holds its current position, the tighter global supply will become, potentially increasing economic pressure on the Trump administration to reach an agreement that reopens the Strait of Hormuz and restores stability to energy markets.
The bank's analysis frames a narrowing set of physical buffers and a heightened chance of price and supply shocks unless one or more mitigating factors reassert themselves.
Clear summary
UBS reports global oil inventories have fallen from about 8.2 billion barrels at the end of February to roughly 7.8 billion by the end of April and forecasts inventories could reach about 7.6 billion barrels by the end of May. Temporary offsets - demand destruction, strategic reserve releases and waivers for Iranian and Russian cargoes - delayed an earlier timetable, but UBS says those buffers are now largely exhausted. The bank warns of rising price volatility, the prospect of physical supply dislocations and a risk of panic buying, particularly if the Strait of Hormuz remains closed, a scenario that could increase pressure on the Trump administration to secure a deal to reopen the waterway.