Oil Market Swings Back to Surplus as Gulf Exports Recover, IEA Says, but Drained Stockpiles and a Diesel Squeeze Linger

The world oil market has tipped back into surplus for the first time since the war with Iran began, the International Energy Agency said Friday, as crude shipments from the Persian Gulf rebound faster than global demand ^[1][2]. In its November Oil Market Report, the Paris-based agency said the market is "showing tentative signs of rebalancing," Reuters reported, a reversal of its earlier forecast for a fourth-quarter shortfall ^[2].

The agency now expects world oil supply to average 105 million barrels a day in the fourth quarter, about 1.7 million barrels a day more than forecast demand, according to Reuters ^[2]. Global supply jumped 2.3 million barrels a day in October to 105.4 million, on top of a 3 million-barrel-a-day gain in September, the IEA said ^[1].

Exports from Gulf producers other than Oman climbed to 18.4 million barrels a day in October, the IEA reported, though they remain 26% below where they stood before the war ^[1]. Reuters noted that the rebound has come even as attacks on tankers moving through the Strait of Hormuz continued ^[2], and the agency named further strikes on shipping as the chief threat to the recovery ^[1].

Stockpiles Are Rising, but Mostly at Sea

Observed global oil stocks rose by 52 million barrels in October, the first increase since June, the IEA said ^[1]. That build came from barrels at sea: oil aboard tankers jumped by 86 million barrels to its highest level since January, carried by strong Gulf crude exports ^[1].

On land, the agency said, stocks kept falling in October and sit at their lowest level since at least 2016 ^[1]. Inventories in the industrialized OECD nations dropped by 47 million barrels during the month ^[1]. Since the war began, observed global stocks have fallen by a combined 462 million barrels, according to the report ^[1].

That is why relief will come slowly. By simple arithmetic, even if the fourth-quarter surplus of roughly 1.7 million barrels a day held steady, refilling a 462 million-barrel hole would take about nine months without a new disruption ^[1][2].

The agency expects world supply to grow by 6.6 million barrels a day in 2027 to 108.1 million, led by a 5.3 million-barrel-a-day recovery in Gulf output ^[1]. Reuters reported that the IEA puts next year's surplus at about 3.8 million barrels a day, slightly below last month's estimate of 3.94 million ^[2]. Demand is forecast to fall by 2.7 million barrels a day this year to 102.3 million before rebounding by 2 million barrels a day in 2027 ^[2].

Diesel Remains the Pressure Point

Crude is recovering faster than the fuels made from it. The IEA said Gulf exports of refined products and LPG are still running at roughly half their pre-war levels, and it called tight product supply, especially diesel, "the overriding concern for the market and consumers" ^[1]. In Europe, diesel prices remain about 77% above their pre-war level, Euronews reported ^[3].

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To ease the squeeze, IEA member countries will make 71 million barrels from emergency stocks available by the end of February, including 15 million barrels of diesel, the agency said ^[1].

For American families, the pump is finally moving the right way. GasBuddy projects the national average for regular gasoline will land between $3.59 and $3.69 a gallon on Thanksgiving, with diesel between $5.85 and $5.95, Newsweek reported ^[4]. When that forecast was issued, gasoline averaged $3.89 and diesel $6.09, and the GasBuddy analyst said prices were falling slightly faster than anticipated ^[4]. Diesel matters far beyond the family car: it moves the trucks that haul turkeys and produce to grocery shelves before the holiday.

Prices, OPEC+ and American Producers

Brent crude gave up earlier gains and was down 0.1% at $95.71 a barrel after the release, Reuters reported ^[2], with both Brent and U.S. crude on track for a second straight weekly loss, according to Yahoo Finance ^[5]. The IEA noted that the North Sea Dated benchmark had fallen 32% from early October to about $93 a barrel when the report was written ^[1]. Iran itself remains under a U.S. blockade that has curbed its oil exports, Reuters noted ^[2].

The OPEC+ alliance is in a holding pattern. Core OPEC+ members agreed on Nov. 1 to keep December output targets steady, and the alliance is expected to settle its 2027 production framework at a ministerial meeting on Nov. 29, EnergyNow reported ^[6]. Gulf members of the group remain limited in how much of their higher targets they can actually use while the war's disruptions persist ^[6].

For American energy, the IEA expects a group of five Western Hemisphere producers, the United States, Canada, Brazil, Argentina and Guyana, to add another 1.1 million barrels a day of supply in 2027 ^[1]. It said Atlantic Basin refiners, particularly in the U.S., are running hard to capture high margins, though lower gasoline prices weighed on U.S. refiners' profits in October even as cheaper crude helped ^[1]. A larger glut next year would be welcome news for household budgets, while also testing how hard domestic producers keep drilling as prices cool.

The IEA's next monthly report is due Dec. 11 ^[1]. Until then, refilling the world's tanks depends above all on the tankers getting through.