World oil market is returning to surplus as Gulf exports recover

LONDON – The world oil market will return to a surplus in the fourth quarter of 2026, the International Energy Agency (IEA) said on Nov 13, as Middle East exports recover faster than global oil demand despite continued attacks on shipping.The agency also gave more details of remaining volumes to come from a record release of oil from its members’ emergency reserves pledged in March, saying 71 million barrels would be made available by the end of February, including 15 million barrels of diesel to ease market tightness.Oil supply will average 105 million barrels per day (bpd) in the fourth quarter, the Paris-based agency, which advises industrialised countries, said in a monthly report, 1.7 million bpd higher than forecast demand.The IEA previously forecast a fourth-quarter supply deficit.“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 agency said in the report.Oil prices reversed earlier gains after the IEA report was released. Brent crude was last down 0.1% at US$95.71 a barrel.The report follows various signs that Gulf oil producers are recovering exports disrupted since the start of the war in late February by using workarounds such as so-called dark crossings through the Strait of Hormuz, where tankers switch off tracking signals to evade attack.The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, pumped 41.23 million bpd of crude in October, OPEC said on Nov 11, up about 2.04 million bpd from September and 97% of the pre-war February volume.Signs of surplusOther analysts have also forecast a return to excess supply, despite the lack of a resolution to the Iran war and continuing tanker attacks in the Gulf. JPMorgan last week forecast a global surplus of 1.4 million bpd in October.High oil prices have also curbed demand in 2026, helping tip the balance into a surplus.World oil demand is forecast to fall by 2.7 million bpd in 2026 to 102.3 million bpd before rebounding by 2 million bpd in 2027, the IEA said, little changed from its previous forecasts.As well as rising output from OPEC+, the IEA flagged supply rising from outside the group.Production from the United States, Canada, Brazil, Argentina and Guyana will rise by 1.6 million bpd in 2026, the IEA said.In 2027, global supply is projected to rise by 6.6 million bpd to 108.1 million bpd, led by a further recovery in Gulf output.Still, the 2027 supply growth forecast is down 1.1 million bpd from October, and the lower outlook partly reflects a downward revision from Iran, the IEA said. Iran is subject to a US blockade that has curbed its oil exports.For 2027, the IEA sees the supply surplus at about 3.8 million bpd, slightly down from a 3.94 million bpd surplus last month. REUTERS