Oil market is returning to surplus as Gulf exports recover: IEA

According to the International Energy Agency (IEA), the world oil market will enter a surplus in the fourth quarter of the year due to increased Gulf exports recovering faster than global demand, despite ongoing attacks on shipping. The agency reported that oil supply will average 105 million barrels per day in the fourth quarter, which is 1.7 million barrels higher than previously forecast demand.

The IEA had previously anticipated a supply deficit for the fourth quarter, but now predicts a surplus. This shift comes as Gulf oil producers utilize workarounds to recover disrupted exports, including using "dark crossings" through the Strait of Hormuz to evade potential attacks. Opec+, which comprises the Organisation of the Petroleum Exporting Countries (OPEC) and allied countries like Russia, is set to pump 41.23 million barrels of crude in October, a 2.04 million barrel increase from September and 97% of pre-war February production levels.

In addition to Opec+ production, the IEA also highlights a record release of oil from emergency reserves pledged in March, with 71 million barrels expected to be made available by the end of February. This includes 15 million barrels of diesel to help alleviate market tightness. Global oil demand is expected to decline by 2.7 million barrels per day in 2026, falling to 102.3 million barrels per day before recovering by 2 million barrels per day in 2027.

The IEA's latest forecast, which is unchanged from previous predictions, shows a slight decrease in the supply growth outlook for 2027 due to a downward revision from Iran, whose exports are subject to a US blockade. For 2027, the IEA projects a global supply surplus of approximately 3.8 million barrels per day.