IEA: Global Oil Supply to Exceed Demand in Q4 as Gulf Exports Recover

Global oil supplies are expected to exceed demand in the fourth quarter after increased Gulf exports pushed the market into surplus in October for the first time since the Iran war, the International Energy Agency said on Friday.

The Paris-based agency said in its monthly report that Gulf shipments reached 18.4 million barrels per day, though that was still 26 per cent below pre-war levels. Attacks on tankers trying to transit the Strait of Hormuz have continued.

Supply Surplus Returns

“The oil market is showing tentative signs of rebalancing, with global oil supplies surpassing demand for the first time since the outbreak of the war in Iran,” the IEA said.

Prices have fallen sharply in recent weeks as Tehran has begun allowing more vessels that obtain its authorisation to traverse the Strait of Hormuz. Iran effectively closed the strait in the initial months of the war launched by the United States and Israel in late February.

The reopening helped overall oil supply rise by three million barrels per day in September and a further 2.3 million barrels in October, the IEA said. The supply increase came in two stages, and the October gain was enough for supplies to surpass demand in October, according to the agency.

Demand Set to Fall

Global demand is set to fall by 2.7 mb/d overall this year as oil prices remain well above pre-war levels and accelerate electrification and fuel efficiencies across the global car fleet, according to the agency.

Diesel prices in particular stood at $180 per barrel in October, around 77 per cent higher than before the war. Iran struck refineries in neighbouring Gulf countries accused of aiding US attacks.

Ukrainian strikes on Russian refineries and other energy installations are also disrupting diesel supplies to the global market.

Diesel Remains the Concern

“The severe tightness in product supply, especially for diesel, remains the overriding concern of the broader market and consumers,” the IEA said.

For fuel consumers and businesses, the alert is on diesel rather than crude alone. The IEA sees supply rebalancing in the fourth quarter, but product markets remain tight, with diesel prices still far above pre-war levels.