TEA: Global oil supply will exceed demand in the fourth quarter

Global oil supply is expected to exceed demand in the fourth quarter, as a surplus emerged on the market in October for the first time since the start of the war in Iran, due to increased exports from Gulf countries, the International Energy Agency (IEA) reported on Friday.

Although attacks on tankers attempting to pass through the Strait of Hormuz continue, supplies from Gulf countries reached 18.4 million barrels per day. However, this figure was still 26 per cent lower than before the war, the Paris-based agency stated in its monthly report.

“There are preliminary signs of a return to balance in the oil market – global oil supply is exceeding demand for the first time since the start of the war in Iran,” – stated TEA.

Oil prices have fallen sharply in recent weeks as Tehran has begun to allow an increasing number of ships, having received its authorisation, to pass through the Strait of Hormuz. Iran effectively closed the strait during the first months of the war, which was launched by the United States and Israel at the end of February.

This helped to increase the overall supply of oil – it rose by 3 million barrels per day in September and by a further 2.3 million barrels in October, the TEA noted.

However, global demand is expected to fall by a total of 2.7 million barrels per day this year, as oil prices remain significantly higher than before the war and “is accelerating the electrification of the global car fleet and improvements in fuel efficiency“.

In October, the price of diesel reached US$180 per barrel, which was approximately 77 per cent higher than before the war, as Iran struck oil refineries in neighbouring Gulf states, which Tehran accuses of aiding the US in carrying out attacks.

Ukraine’s strikes on Russian oil refineries and other energy facilities are also disrupting the supply of diesel to the global market.

“A significant shortage of products, particularly diesel, remains a major source of concern for the wider market and consumers,” the TEA stated.