Global Oil Supply To Surpass Demand In Fourth Quarter – IEA

Global oil supplies are expected to exceed demand in the fourth quarter, after increased Gulf exports led to a market surplus in October for the first time since the Iran war, the International Energy Agency said Friday.

Even though attacks on tankers trying to transit the Strait of Hormuz have continued, Gulf shipments reached 18.4 million barrels per day (mb/d) — though that was still 26 percent below pre-war levels, the Paris-based agency said in its monthly report.

“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,” the IEA said.

Prices have fallen sharply in recent weeks as Tehran has begun allowing more vessels that obtain its authorisation to traverse the Strait of Hormuz, which it effectively closed in the initial months of the war launched by the United States and Israel in late February.

That helped overall oil supply to rise by three million barrels per day in September and a further 2.3 million barrels in October, the IEA said.

But global demand is set to fall by 2.7 mb/d overall this year as oil prices remain well above pre-war levels and “accelerate electrification and fuel efficiencies across the global car fleet”.

Diesel prices in particular stood at $180 per barrel in October, around 77 percent higher than before the war, as Iran struck refineries in neighbouring Gulf countries accused of aiding US attacks.

Ukrainian strikes on Russian refineries and other energy installations are also disrupting diesel supplies to the global market.

“The severe tightness in product supply, especially for diesel, remains the overriding concern of the broader market and consumers,” the IEA said.