The International Energy Agency (IEA) has released a report stating that global oil supplies are anticipated to exceed demand in the fourth quarter of the year. This shift is attributed to increased exports from the Gulf, which generated a market surplus for the first time since the onset of the Iran war.
According to the IEA, shipments from the Gulf reached 18.4 million barrels per day, although this figure remains 26 percent lower than levels seen before the conflict. Despite the ongoing attacks on tankers transiting the Strait of Hormuz, the rise in shipments has contributed to a total increase in supply of three million barrels per day in September and an additional 2.3 million barrels in October.
As tensions have eased slightly, Iran has allowed more vessels to traverse the Strait of Hormuz, which had been effectively closed in the early stages of the war initiated by the United States and Israel. However, the IEA noted a significant drop in global oil demand, projected to be down by 2.7 million barrels per day this year due to high oil prices and advancements in electrification and fuel efficiencies in vehicles.
In particular, diesel prices have seen a dramatic rise, reaching $180 per barrel in October, which is approximately 77 percent higher than pre-war levels. The report highlights that attacks on refineries in Gulf nations accused of supporting US initiatives, as well as strikes on Russian energy installations from Ukraine, are further complicating diesel supply dynamics.
The IEA warns that the persistent tightness in product supply, particularly concerning diesel, continues to be a primary concern for the oil market and consumers.
