The International Energy Agency (IEA) said on Friday that global oil supply had overtaken demand for the first time since the Iran war began, as observed inventories rose by 1.7 million barrels a day in October.
Observed inventories rose by 52 million barrels in October, the first increase since June, as Gulf exports recovered much faster than demand. Stocks held on land kept falling.
North Sea Dated, the physical benchmark for crude, fell 32% from a high of $136 a barrel on 8 October to around $93. That is still $22 a barrel above pre-war levels.
Global supply rose by 2.3 million barrels a day (mb/d) to 105.4 mb/d in October, after a 3 mb/d increase in September. Output is up 5.3 mb/d since August.
Gulf oil exports, excluding Oman, reached 18.4 mb/d, which is 26% below pre-war levels. Crude flows rose to 15 mb/d, or 82% of their pre-war level, despite continued attacks on tankers.
The agency said the market was showing “tentative signs of rebalancing”. Its November balances point to a return to surplus in the fourth quarter, with a larger build in 2027, so the surplus is largely a forecast.
That is a shift from the October assessment, which expected the market to stay in deficit through the end of the year, with a surplus emerging only in 2027.
The agency said downside risks to the forecast persist because attacks on shipping undermine maritime security, which it called “pivotal to a sustained recovery”.
Products remain tighter than crude. The IEA said the squeeze in product supply, especially diesel, is still the “overriding concern” for the market and consumers.
Diesel prices in Europe fell 11% over the same period but, at close to $180 a barrel, remained 77% above pre-war levels.
Attacks on Russian energy infrastructure continue to limit its diesel exports, and the IEA said it will speed up the release of emergency diesel stocks over the coming months.
Demand is still depressed. Gulf exports of refined products and liquefied petroleum gas remain at roughly half of pre-war levels, and fuel prices are high.
World demand is forecast to fall by 2.7 mb/d in 2026 to 102.3 mb/d, then rise by 2 mb/d in 2027.
The year-on-year decline is expected to ease to 2.7 mb/d in the fourth quarter, from 5 mb/d in the second quarter and 3.8 mb/d in the third.
Supply is forecast to fall by 4.8 mb/d in 2026 and rebound by 6.6 mb/d to an average of 108.1 mb/d in 2027. The agency had earlier projected a 2026 decline of 5.7 mb/d.
Observed global stocks have fallen by a cumulative 462 mb since the war began, against a shortfall of 509 mb at the end of September.
Stocks held on land remain at their lowest since at least 2016, the IEA said in its November oil market report.
