The International Energy Agency reported that worldwide oil supply has returned to surplus conditions for the first time following the outbreak of the US-Israeli conflict with Iran. According to the Paris-based organization, supplies outpaced consumption by approximately 2 million barrels per day in October, driven largely by a rapid recovery in Gulf region exports that has outpaced the growth in global demand.
The Middle East conflict had previously disrupted global oil markets by interrupting shipments through the Strait of Hormuz, a critical passage through which about one-fifth of the world’s oil and gas typically flows. The resulting supply constraints contributed to significant increases in energy prices earlier in the year, with the international crude benchmark Brent rising from approximately $72 per barrel in February to $126 by late April. Recent weeks have seen prices moderate following statements from the US president regarding the conflict, with Brent trading near $95 per barrel.
The IEA projects that global oil supply will average 105 million barrels daily during the final quarter of the year, exceeding forecasted demand by 1.7 million barrels. This represents a revision from previous expectations of a supply deficit during the period. The easing supply situation has also reduced pressure on emergency petroleum reserves that were drawn down during the conflict disruptions. IEA member nations plan to accelerate the release of remaining pledged emergency stockpiles, introducing an additional 71 million barrels to markets by the end of February.
OPEC+ reported production of 41 million barrels daily in October, reflecting a substantial increase from September levels and representing approximately 97 percent of pre-conflict output volumes. Global oil demand is anticipated to decline by 2.68 million barrels daily during the current year to 103.2 million barrels per day, though consumption is forecast to recover in the following year. Growth in demand is expected to be limited by elevated prices, vehicle electrification trends, and improved fuel efficiency standards, with increases primarily concentrated in petrochemical feedstock applications.
Concerns persist regarding potential additional disruptions from ongoing regional tensions, including reports of possible further military operations in the area. However, the normalization of supply-demand dynamics has provided some stabilization to markets following months of elevated uncertainty.
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