Gulf export recovery puts oil market on course for surplus

Recovering Persian Gulf shipments are expected to push global oil supply above demand this quarter for the first time since the Iran war began, according to the International Energy Agency (IEA). The agency forecasts a quarterly surplus of about two million barrels a day, reversing its previous expectation of a similarly sized deficit.

In its monthly report, the IEA said exports had recovered despite continuing attacks on tankers. Gulf shipments excluding Oman totalled 18.4 million barrels a day in October, with Saudi Arabia and Iraq driving the rebound.

Saudi crude output climbed to 10 million barrels a day in October. Iraq produced 4.6 million a day, its highest level in seven years, the agency said.

For 2026 overall, the IEA still expects demand to exceed supply, but it reduced the projected shortfall to 685,000 barrels a day from 1.7 million a day. It expects the surplus emerging this quarter to become significantly larger next year.

Observed inventories rose in October after declining since June, although most of the increase involved oil at sea. Stocks held onshore remained at a decade low, according to the agency.

IEA member countries will accelerate emergency stockpile releases, making another 71 million barrels available through the end of February. The agency also forecasts that global demand will shrink by 2.68 million barrels a day this year, averaging 102.3 million barrels a day.

Consumption is expected to recover next year but stay below 2025 levels. The IEA said petrochemical feedstocks would drive growth, while elevated prices, electrification and fuel efficiency would restrain the recovery in vehicle fuels.