Oil outlook points to diverging trends as supply grows and global inventories fall
Key Facts
It cannot be confirmed that the global oil market entered a surplus because of higher exports and weak demand, as the Reuters report dated November 4 could not be opened to verify the claim attributed to JPMorgan. In the latest available International Energy Agency data in the evidence, global supply rose by 2.5 million barrels per day month on month in September 2026, to 102.3 million barrels per day, led by Gulf producers. But the increase in supply coincided with a 10 million-barrel decline in reported global oil inventories during the same month. Global inventories at the end of September were 509 million barrels below their level at the end of February, according to the agency. These figures provide context on the market balance, but on their own do not prove that the market had shifted into a surplus on the day of the news report.
On the demand side, the International Energy Agency forecast in its October report that global oil demand would fall by an average of 2.6 million barrels per day in 2026. The estimate included an annual decline of 2.5 million barrels per day in the fourth quarter. By contrast, JPMorgan said in its published 2026 forecasts that global oil demand would grow by 0.9 million barrels per day in 2026, then by 1.2 million in 2027. The firm estimated that supply growth in 2026 could exceed demand growth by three times. The differing estimates from the agency and the bank reflect different views of the demand outlook, while the evidence does not establish the reason for the divergence or favor either estimate. JPMorgan said expected market imbalances may not fully materialize because adjustments could occur on both the supply and demand sides.
Crude exports from Gulf producers surged in September, rising by 4.4 million barrels per day to 13.9 million barrels per day, according to the International Energy Agency. The agency said exports, led by Saudi Arabia, exceeded 75% of pre-war levels. In a separate comment, JPMorgan Asset Management said Gulf producers had used alternative routes to raise crude exports to 13.9 million barrels per day, above 75% of pre-war levels. But the increase in crude shipped by sea did not prevent onshore inventories from falling: oil at sea rose by 103 million barrels in September, while onshore inventories declined by 113 million, according to the International Energy Agency. The agency said the drop in onshore inventories outweighed the increase in oil on the water, highlighting the divergence between export flows and inventory movements.
The shift in supply routes was accompanied by higher transport costs, an indicator that JPMorgan Asset Management said reflected ongoing logistical risks. Freight rates from the Gulf to Asia had reached about five times pre-war levels by mid-October. The firm's comment also pointed to logistical constraints and risks facing the market, alongside Gulf producers' use of alternative routes to transport crude. On prices, JPMorgan Asset Management said Brent crude rose 14% in October to $111 a barrel. It added that crude was up 83% year to date through October. The evidence does not include price movements directly linked to the November 4 news, while EL7 data recorded Brent's close at 103.6 and West Texas Intermediate at 96.09 on November 3.
On production management, 7 OPEC+ participating countries decided to keep December 2026 production at the required production level for September 2026. The decision was made at a November 1 meeting, according to an OPEC statement. The statement set November 29 as the date for the participating countries' next meeting. The decision sets December production at the September benchmark, while the next meeting date gives the seven countries an opportunity to meet again. The evidence did not specify a production volume or details on the decision's impact on the market balance. The announced step therefore remains to maintain the required level until the meeting scheduled for the end of November.
The International Energy Agency is scheduled to issue its November monthly oil market report on November 13, 2026. In its latest forecasts, the agency projected that gasoil supply would fall short of demand in the fourth quarter of 2026. It also said replenishment of depleted inventories was unlikely to begin before the second half of 2027. These forecasts set out a timeline for product markets and inventories in the coming months, alongside the date of the agency's new report, which will provide an update. In the meantime, the OPEC+ meeting on November 29 remains the next decision point cited in the evidence on participating countries' production.