Source: Sharecast
According the International Energy Agency’s latest market report, the oil market was showing "tentative signs of rebalancing", with oil supplies surpassing demand for the first time since war broke out between the US and Iran.
Observed oil inventories rose by 1.7m barrels per day in October, as Gulf exports recovered faster than global demand, despite ongoing attacks on tankers. It was the first increase since June.
Global supplies hit 105.3m bpd, up 2.3m bpd.
Demand, meanwhile, continued to be subdued by ongoing disruptions to exports of refined products and liquified petroleum gas from the Gulf, which remain at roughly half of pre-war levels, as well as high prices.
Looking ahead, and the IEA forecast demand to fall by 2.7m bpd in the current year, to 102.3m bpd, before rebounding by 2m bpd in 2027.
On the supply side, the influential Paris-based body had forecast a slim deficit for the fourth quarter, but it now expects the global oil market to be in surplus in the final three months of the year, "with a more substantial build" in 2027, though it noted: "As always, downside risks to the forecast persist, as attacks on shipping undermine maritime security, which is pivotal to a sustained recovery."
It concluded: "For now, the severe tightness in product supply, especially for diesel, remains the overriding concern of the broader market and consumers."
The US launched its offensive against Iran at the end of February. Tehran responded by effectively shutting the vital Strait of Hormuz and attacking perceived American allies in the region, which is responsible for much of the world’s oil and gas supplies.
The two countries have since agreed an uneasy ceasefire, which has allowed shipments to tentatively resume and tankers to use the Strait of Hormuz, while talks continue to try and find a permanent deal. But conflict remains a threat in the region, with Yemen’s Houthi rebels recently stepping up attacks on Saudi Arabia infrastructure.