The world’s oil supply is swinging back to a surplus for the first time since the start of the US-Israeli war against Iran, the International Energy Agency (IEA) has said.
Oil supplies outstripped demand by almost 2m barrels a day in October, the Paris-based agency said, as “Gulf exports recovered much faster than global oil demand”.
The market was “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 reported.
It comes after months of disruption to the global oil market as the Middle East conflict blocked shipments via the strait of Hormuz, through which a fifth of the world’s oil and gas supply normally passes.
The conflict has triggered a rise in energy prices this year. Brent crude, the international benchmark for oil prices, traded at about $72 a barrel in February, before the conflict began, and hit $126 a barrel by the end of April.
However, this week prices fell to their lowest level since late August, at $89.66, after the US president, Donald Trump, told reporters that the war with Iran was “ effectively over ”. Brent crude was trading at about $95 a barrel on Friday.
There are still concerns around continued attacks on oil tankers in the Middle East, and this week reports emerged that senior Iranian officials believe the US could be planning further military strikes .
However, the IEA said it expected global oil supply to average 105m barrels a day in the final three months of the year, 1.7m higher than forecast demand. The agency had previously expected a deficit in the fourth quarter.
The recovery in global oil supplies has also eased pressure on emergency stockpiles, which have been diminished by the Iran conflict. The IEA said its members would speed up the release of remaining emergency oil stockpiles pledged earlier this year, adding a further 71m barrels to the market by the end of February. The stocks are held in refineries, oil terminals, power stations and at offshore fields in the North Sea.
The Opec+ oil cartel said this week that it had pumped 41m barrels a day of crude in October, up from about 2m in September and at 97% of its prewar volumes.
Global oil demand is also expected to fall by 2.68m barrels a day this year to 103.2m a day, the IEA reported. Consumption is forecast to rebound next year but is still expected to remain below 2025 levels, with growth mostly in petrochemical feed stocks as the market for vehicle fuel is hit by “high prices, electrification and fuel efficiency”.
