UBS warns global oil stockpiles could hit record lows if Hormuz stays shut
Swiss bank UBS said that if the de facto closure of the Strait of Hormuz continues, global oil stockpiles could approach all-time lows by the end of May. Analysts said current flows are covering less than 40% of the usual 17 million barrels a day. Upward pressure on crude is moving to the center of the investor agenda.
In a note to clients, UBS analysts warned that if the disruption from the Iran war continues, commercial oil inventories could test record lows by the end of May. The bank estimates tanker traffic through Hormuz has fallen to less than half of the normal 17 million barrels a day.
The US Navy is still patrolling the strait, according to statements relayed by Anadolu Agency, but Gulf shipping operators continue to divert their own vessels onto alternative routes. Japan announced it will receive its first LNG cargo via Hormuz since the closure, but no similar clarity exists for crude flows. Asian refiners are increasing ship-to-ship transfers to balance supply.
On prices, Brent crude is trading near recent peaks. UBS says the pace of inventory drawdown over the next four weeks will be decisive. Investors are watching how quickly Saudi Arabia and the UAE can bring alternative pipelines online; those decisions could feed directly into inflation expectations and central-bank timetables.
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