New Delhi: The global oil market is showing signs of recovery, with higher crude supplies from Gulf countries pushing global inventories up for the first time since June and bringing the market closer to a surplus, the International Energy Agency (IEA) said Friday.
In its November oil market report, the Paris-based independent inter-governmental agency said global oil supplies increased by 2.3 million barrels per day (mb/d) in October to 105.4 mb/d, following a rise of 3 mb/d in September. The increase was largely driven by higher exports from Gulf countries, despite continued attacks on energy infrastructure and oil tankers.
Oil exports from Gulf countries, excluding Oman, reached 18.4 mb/d in October. While this was still 26 percent below pre-war levels, crude exports from the region recovered to 15 mb/d, or 82 percent of their pre-war levels.
The IEA has raised its estimate for global oil supplies in the October-December quarter by 3.3 mb/d, reflecting the faster-than-expected recovery in Gulf exports. The agency expects the global oil market to return to a surplus in the fourth quarter of 2026, with supplies likely to exceed demand by a larger margin in 2027.
The improvement in supplies has helped ease pressure on international crude prices. North Sea Dated (oil loaded from North Sea terminals) crude prices fell 32 percent from a high of $136 per barrel in early October to around $93 per barrel at the time of the IEA 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.
For India, the world’s third-largest oil consumer and one of the largest crude oil importers, the recovery in Gulf supplies could improve crude availability and ease pressure on international oil prices.
India depends heavily on imports to meet its crude oil requirements, with a significant share of supplies coming from West Asia. A sustained increase in exports from the region could provide some relief to Indian refiners by improving the availability of crude.
The recovery in supplies has also begun to reflect in global oil inventories, which rose by 52 million barrels (equivalent to 1.7 mb/d) in October, marking the first increase since June.
However, much of this increase came from oil held on tankers at sea, which grew by 86 million barrels in October to their highest level since January, as higher Gulf exports increased the volume of crude being transported.
Onshore inventories, or oil stored in land-based facilities, continued to decline and remained at their lowest levels since at least 2016.
The IEA said global oil inventories had fallen by a total of 462 million barrels since the start of the war. Oil stocks in major developed economies also declined by 47 million barrels in October.
This shows that while more crude is moving out of the Gulf, the recovery has not yet led to an increase in oil stocks held on land.
Apart from the Gulf, five major oil-producing countries in the Americas—the United States, Canada, Brazil, Argentina and Guyana—are expected to play an important role in increasing global supplies.
Together, these countries, referred to by the IEA as the Americas Quintet, are expected to increase production by 1.6 mb/d in 2026 and add another 1.1 mb/d in 2027. Gulf countries, however, are expected to account for the largest share of next year’s recovery, with their production projected to increase by 5.3 mb/d.
Global demand remains weak
While supplies are recovering, global oil demand remains weak because of high fuel prices and disruptions to exports of petroleum products and liquefied petroleum gas (LPG) from the Gulf.
The IEA expects global oil demand to fall by 2.7 mb/d in 2026 to 102.3 mb/d, before increasing by 2 mb/d in 2027.
Around 80 percent of the increase in demand next year is expected to come from LPG, ethane and naphtha, which are mainly used by the petrochemical industry. Demand for transport fuels such as petrol and diesel is expected to see only modest growth as high prices encourage greater fuel efficiency and a shift towards electric vehicles.
The IEA said continued attacks on Russian energy infrastructure were also restricting diesel supplies to international markets, adding to supply losses caused by disruptions in the Middle East.
Global refinery operations fell by 1.3 mb/d in October to 81.3 mb/d, their lowest seasonal level, but are expected to recover to 84.7 mb/d in December.
The agency cautioned that further attacks on oil tankers and shipping routes could threaten the recovery in supplies, even as the global market moves towards a surplus.
(Edited by Viny Mishra)
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