File photo: Fawley oil refinery viewed from Weston Shore, Southampton, April 2015. Photo: Sw257 / Wikimedia Commons / Cropped and resized, adapted image CC BY-SA 4.0.
The global oil market is showing tentative signs of rebalancing as Gulf exports recover, the International Energy Agency said Friday in its November Oil Market Report. The agency said supplies surpassed demand in October for the first time since the war in Iran began, but it also said diesel remains very tight.
Global oil supply rose by 2.3 million barrels per day in October to 105.4 million barrels per day, after an increase of 3 million barrels per day in September. The IEA said that lifted output by 5.3 million barrels per day since August. Gulf oil exports, excluding Oman, reached 18.4 million barrels per day in October, which is 26% below pre-war levels. Crude flows from the Gulf reached 15 million barrels per day, or 82% of pre-war levels. The agency said attacks on energy infrastructure and tankers are continuing.
Observed global oil inventories rose by 52 million barrels in October, the first increase since June, as oil on water jumped by 86 million barrels to its highest level since January. On-land stocks kept falling and are at their lowest level since at least 2016, the IEA said. OECD total stocks fell by 47 million barrels. Observed global stocks have fallen by a cumulative 462 million barrels since the start of the war.
On prices, the IEA said North Sea Dated crude fell by 32%, from a high of $136 a barrel in early October to $93 a barrel at the time of writing. That is about $22 a barrel above pre-war levels. Diesel in Europe fell 11% over the same period but, at close to $180 a barrel, remained 77% above pre-war levels, according to the agency. The $93 figure is the IEA’s reading at the time it wrote the report, not a live quote.
The agency’s forecasts point to easing ahead. It expects the market to return to a surplus in the fourth quarter of 2026, with a larger build in 2027. World oil demand is forecast to fall by 2.7 million barrels per day in 2026, to 102.3 million barrels per day, and rebound by 2 million barrels per day in 2027. Supply is forecast to fall by 4.8 million barrels per day in 2026 and rebound by 6.6 million barrels per day in 2027, to 108.1 million barrels per day. These are forecasts, and the IEA said downside risks remain, including attacks on shipping.
The IEA said the tightness in product supply, especially diesel, is the main concern for the market and for consumers. It said continued attacks on Russian energy infrastructure are choking off Russian diesel exports, adding to losses from the Middle East. It also said the accelerated release of IEA emergency diesel stocks in the coming months should help bridge the gap until refineries and product output recover.
Global refinery runs fell by 1.3 million barrels per day in October to a seasonal low of 81.3 million barrels per day, and the IEA forecasts a rebound to 84.7 million barrels per day in December.
JBizNews Desk | New York
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