IEA Sees First Signs of Oil Market Rebalancing Since War


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- Global oil markets in October rebalanced for the first time 
since the start of the U.S. war on Iran, according to the International Energy 
Agency's (IEA) newest oil market report published Friday (11/13). A surge in 
supply in combination with a tepid demand recovery resulted in the first 
surplus since February, IEA data showed.

   Global oil supply rebounded by 2.3 million bpd last month amid the ongoing 
recovery in Middle Eastern exports. The sizable jump narrowed the gap to 
year-ago levels to 2.9 million bpd, compared to the more than 8 million bpd 
year-on-year decline recorded in the second and third quarters of 2026.

   In addition to Persian Gulf flows soaring back to more than 80% of pre-war 
levels, this year's high price environment and expectations of a prolonged 
supply disruption also lifted non-OPEC crude oil output. The Paris-based energy 
watchdog estimated combined production from the Americas alone to have soared 
by 1.6 million bpd year-on-year, spearheaded by record high output from the 
U.S. and Guyana. 

   A slower-than-expected recovery in global oil demand also contributed to the 
rebalancing. The IEA again lifted its demand decline forecast for 2026 by 
100,000 bpd to 2.7 million bpd, the steepest drop since the pandemic. Freight 
rates surged to all-time highs last month, cutting into refining margins and 
dampening crude oil demand. Disruptions to Middle Eastern LPG and refined fuels 
flows, which in contrast to crude oil continued at only half their pre-war 
pace, also cut into demand.

   Last month's rebalancing, in fact, was mostly confined to crude oil. Refined 
fuels, particularly middle distillates, continued to be in short supply. Global 
crude throughput declined by 1.3 million bpd from September to a seasonal low 
of 81.3 million bpd amid ongoing refinery disruptions and sky-high freight 
costs. While price-induced demand destruction and seasonally record high U.S. 
refining operations helped ease the global fuels imbalance, the IEA sees the 
ongoing diesel tightness continue well into 2027, even when factoring in the 
coordinated sizable release of strategic diesel stocks from its European 
partners.




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