Global oil supply has returned to surplus, says IEA
What's the story
The International Energy Agency (IEA) has reported a major shift in the global oil market. For the first time since the onset of the US-Israeli war against Iran, oil supplies have outpaced demand. The Paris-based agency said that in October, supply exceeded demand by nearly two million barrels per day. This is mainly due to "gulf exports recovering much faster than global oil demand."
Market disruption
Impact of Middle East conflict on global oil market
The ongoing conflict in the Middle East has significantly disrupted the global oil market.
The Strait of Hormuz, a major route for one-fifth of the world's oil and gas supply, has been blocked by this conflict.
This disruption led to a spike in energy prices earlier this year.
Brent crude, the international benchmark for oil prices, rose from around $72 per barrel in February to $126 by late April.
Price stabilization
Brent crude prices fall to lowest since late August
This week, Brent crude prices fell to their lowest since late August at $89.66 per barrel.
The drop came after US President Donald Trump announced that the war with Iran was "effectively over."
However, concerns remain over continued attacks on oil tankers in the Middle East and possible further military strikes by the US.
Supply forecast
IEA's revised forecast for global oil supply and demand
The IEA expects the global oil supply to average 105 million barrels per day in Q4 2026, which is 1.7 million higher than the projected demand.
This is a major shift from its earlier prediction of a deficit for the fourth quarter.
The agency also said that its members will expedite the release of remaining emergency oil stockpiles pledged earlier this year, adding another 71 million barrels to the market by February 2027-end.
Demand projection
OPEC+ production increases, but demand remains a concern
The OPEC+ oil cartel reported a production of 41 million barrels per day in October, up from around two million in September and at 97% of its pre-war levels.
The IEA also projects a decline in global oil demand by 2.68 million barrels per day this year to an average of 103.2 million barrels per day.
While consumption is expected to rebound next year, it will still be below 2025 levels due to "high prices, electrification and fuel efficiency."