Global Oil Surplus Widens to 1.4 Million Barrels a Day in October

Key Facts

The global oil market returned to surplus in September before the surplus widened in October, according to a JPMorgan estimate cited by Reuters. The surplus reached 1.1 million barrels a day in September, then rose to 1.4 million barrels a day in October. October’s level approached the average surplus recorded in the previous year, at 1.3 million barrels a day. These figures mean global supply once again exceeded consumption after market disruption earlier in the year. But institutions did not share a single view of the market: Goldman Sachs described the period between September and October as broadly balanced.

JPMorgan attributed the shift to three factors occurring at the same time: recovering oil flows from the Middle East, higher production in other countries and weaker demand. The bank said these factors pushed global supply above consumption again. This interpretation links the return of barrels to the market with a decline in consumption, rather than attributing the surplus to weaker demand alone. Goldman Sachs said higher prices accompanied a decline in global demand in September. It estimated that demand fell by about 1.3 million barrels a day compared with the 2025 average.

Global crude imports rose to 44.9 million barrels a day in October, according to flow data cited by Reuters. That was 1.3 million barrels a day above the level in the same month of the previous year. JPMorgan also estimated that Middle Eastern oil exports recovered to about 20.7 million barrels a day in October, after falling to 9.8 million barrels a day in March. Exports remained below pre-war levels despite the recovery. The increase in flows is consistent with the bank’s estimate that the supply surplus had returned, without implying that regional supplies had fully recovered to their previous levels.

In the Gulf, average crude and condensate exports reached 14 million barrels a day in October, or about 86% of pre-war levels, according to Reuters. Refined-product exports stood at 3.1 million barrels a day, slightly more than half their usual levels. The comparison shows an uneven recovery, with crude and condensate exports recovering while refined-product shipments remained further depressed. Goldman Sachs said higher production outside the Gulf and lower demand offset the continued production shortfall in the Gulf during September. In this account, the market could approach balance even though regional production had not fully recovered.

Goldman Sachs’ balanced-market estimate differs from JPMorgan’s calculation, which found a surplus in September that widened in October. Goldman Sachs said global inventories did not decline between the two months and described the market as broadly balanced over that period, compared with a deficit in March. That points to differing readings of the market balance during the period, rather than agreement that a surplus was certain. Goldman Sachs also estimated that third-quarter demand was 3.3 million barrels a day lower year on year. Much of the weakness was concentrated in China, the Middle East and OECD Asia, according to the bank.

Near-term price curves are sending mixed signals about oil availability. Short-dated Brent contracts for difference moved into contango, a structure usually associated with an abundance of supply available for immediate delivery. By contrast, Brent futures from the January 2027 delivery contract onward remained in backwardation, indicating that near-term supply remained tight. The divergence reflects a difference between the picture for immediate delivery and futures pricing for later periods. Goldman Sachs said its October estimate of Brent’s fair value took inventories into account and stood at $85 a barrel.

The disruption stems from the war with Iran, which began in late February, after market forecasts at the start of 2026 had broadly pointed to a surplus. In September, dated North Sea crude rose $26.17 a barrel month on month to $116.89 as fighting in the Middle East intensified and Asian refinery purchases accelerated, according to the International Energy Agency. In its October report, the agency estimated that global demand would fall by 2.5 million barrels a day year on year in the fourth quarter, and by an average of 2.6 million barrels a day during 2026. Goldman Sachs expected the supply-demand balance to shift to a surplus in the fourth quarter of 2026 and throughout 2027. The International Energy Agency, by contrast, said the market would remain in deficit through the end of the year, with demand expected to decline because of high prices and worsening economic outlooks in some countries.