Global oil supply returns to surplus for first time since start of Iran war, says IEA

The International Energy Agency (IEA) has reported that the global oil supply has once again reached a surplus, marking the first time since the beginning of the US-Israeli war against Iran. According to the Paris-based agency, oil supplies exceeded demand by nearly 2 million barrels per day in October. This surplus can be attributed to the faster recovery of Gulf exports compared to the slow growth of global oil demand.

The market is showing "tentative signs of rebalancing" as global oil supplies surpassed demand for the first time since the start of the war in Iran, the IEA reported. The conflict has caused significant disruption to the global oil market, blocking shipments through the Strait of Hormuz, which typically carries a fifth of the world's oil and gas supply.

Brent crude, the international benchmark for oil prices, experienced a surge in energy prices this year, rising from $72 a barrel in February to a high of $126 a barrel by the end of April. However, prices have since fallen to their lowest level since late August, at $89.66, following US President Donald Trump's declaration that the war with Iran was "effectively over."

Despite ongoing concerns about attacks on oil tankers in the Middle East and reports suggesting Iran could plan further military strikes, the IEA anticipates global oil supply to average 105 million barrels per day in the last three months of the year, a 1.7 million barrel increase compared to the previously forecast demand. The agency had previously predicted a deficit in the fourth quarter.

This recovery in global oil supplies has also alleviated pressure on emergency stockpiles, which had been diminished due to the Iran conflict. The IEA stated that its members will expedite the release of remaining emergency oil stockpiles pledged earlier this year, adding a further 71 million barrels to the market by the end of February.

These stocks are stored in refineries, oil terminals, power stations, and offshore fields in the North Sea. The Organization of the Petroleum Exporting Countries (OPEC+) reported in October that it pumped 41 million barrels of crude per day, up from about 2 million barrels in September and at 97% of its prewar volumes. Global oil demand is also expected to decrease by 2.68 million barrels per day this year, reaching 103.2 million barrels per day, as consumption is forecast to rebound next year but remain below 2025 levels due to factors such as high prices, electrification, and fuel efficiency.