IEA says oil swings to 2m barrel-a-day surplus as Gulf exports recover

Updated 12:47 p.m. ET, Nov. 13

Key points

• The IEA says global oil supply exceeded demand by almost 2m barrels a day in October, the first surplus since the Iran war began.
• Russian crude output rose 210,000 barrels a day to 8.73 million, while global supply reached 105.4 million barrels a day.
• Analysts say prices may stay high because shipping Gulf oil is costly and the risk of new attacks keeps a premium in prices.

The International Energy Agency said global oil supply moved back into surplus in October, exceeding demand by almost 2m barrels a day. It is the first surplus since the US-Israeli war against Iran began, and the agency said Gulf exports recovered much faster than global demand.

Global supply reached 105.4 million barrels a day in October, up 2.3 million from September. According to the IEA, supply has climbed 5.3 million barrels a day since August, an extraordinary gain achieved while attacks on energy assets and tankers continue.

Observed global stocks rose by 52 million barrels in October, or 1.7 million barrels a day, the first stock increase since June. The agency now expects fourth-quarter supply to exceed demand by 1.7m barrels a day, reversing its earlier forecast of a deficit. Analysts warned that it will take months to rebuild stockpiles depleted by the conflict.

Output from the Gulf and Russia

Iraq's oil output surged in October to its highest level since 2019, while production in the United Arab Emirates held near the previous month's high, the IEA said. Crude output from OPEC+ reached 41m barrels a day in October, climbing from roughly 2m in September and standing at 97% of prewar levels.

Russia's crude output rose by 210,000 barrels a day to 8.73 million in October. Diesel exports are still tight, as strikes on Russian energy sites and disruption in the Middle East restrict shipments of refined products. The Treasury's Office of Foreign Assets Control issued a general license authorizing certain Russian-origin diesel transactions through April 7, 2027, following a deal struck on Oct. 9 between Trump and Putin.

Demand and emergency stocks

The IEA expects global oil demand to fall by 2.68m barrels a day this year, to 103.2m barrels a day. Consumption is forecast to rebound next year but to remain below 2025 levels, with growth mostly in petrochemical feedstocks as vehicle fuel demand is hit by high prices, electrification and fuel efficiency.

IEA members will speed up the release of remaining emergency stocks pledged earlier this year, adding 71m barrels to the market by the end of February. The IEA said the recovery has eased pressure on those stockpiles.

The IEA on the market

IEA analysts said 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." Trump said the war with Iran was "effectively over" earlier this week.

Brent traded near $72 a barrel in February, before the conflict began, and reached $126 by the end of April. It fell this week to $89.66, its lowest level since late August, and was trading at about $95 on Friday. Reports emerged this week that senior Iranian officials believe the US could plan further military strikes, while attacks on oil tankers in the Middle East continue.

Analysts are not ready to call a return to pre-war prices. Moving oil out of the region is expensive, and the threat of new attacks keeps a risk premium in prices, according to Axios.

What's next: IEA members will release a further 71m barrels of emergency stocks by the end of February.

Sources: Axios, Bloomberg, CNBC, Financial Times, The Guardian