IEA Raises Fourth-Quarter Oil Supply Estimate by 3.3 Million Barrels a Day
Key Facts
The International Energy Agency raised its estimate for global oil supply in the fourth quarter of 2026 by 3.3 million barrels a day, a shift reflecting a faster recovery in Gulf exports, according to its Oil Market Report released on November 13. The agency said global supply rose by 2.3 million barrels a day in October to 105.4 million barrels a day, following an increase of 3 million barrels a day in September. The revision matters as the global market is expected to return to surplus in the fourth quarter, according to the agency. But improved crude availability has not ended tight supplies of oil products: the agency described shortages, particularly of diesel, as the market’s and consumers’ main concern. It attributed the continuing shortages to attacks on Russian energy infrastructure and supply losses from the Middle East.
Oil exports from the Gulf, excluding Oman, reached 18.4 million barrels a day in October, but remained 26% below pre-war levels. The latest rise in exports drove crude flows, which climbed to 15 million barrels a day, equivalent to 82% of pre-war levels. The figures show a material recovery in supply, while exports remain below their pre-war levels. In a broader view of supply trends, the agency said production in the United States, Canada, Brazil, Argentina and Guyana is set to increase by 1.6 million barrels a day during 2026. That increase would partly offset supply losses from the Middle East and Russia, the report said.
On inventories, observed global oil stocks rose by 52 million barrels in October, their first increase since June. Oil in transit by sea increased by 86 million barrels during the month, while onshore inventories remained at their lowest levels since at least 2016. This contrasts with the cumulative decline of 462 million barrels in observed global stocks since the start of the war, according to the agency. Total inventories in OECD countries also fell by 47 million barrels in October, including a 41 million-barrel decline in industry stocks. These movements show that an increase in observed inventories does not mean all components are recovering at the same pace, as onshore and industry stocks remain low.
Global refinery runs fell by 1.3 million barrels a day month on month in October, to 81.3 million barrels a day, a seasonal low. The agency expects runs to rise to 84.7 million barrels a day in December. On demand, it expects global oil consumption to fall by 2.7 million barrels a day in 2026 to 102.3 million barrels a day. Demand is then expected to rise by 2 million barrels a day in 2027. This demand outlook coincides with an expected return to market surplus in the fourth quarter of 2026, with a larger buildup in 2027, setting supply and demand on divergent paths next year.
Improved supply forecasts have been reflected in lower prices since early October, the report said. Dated Brent fell 32% from a peak of $136 a barrel in early October to $93 at the time the November report was prepared. European diesel prices also fell 11% over the same period. But they remained near $180 a barrel, 77% above their pre-war level. The contrast between falling crude prices and persistently high diesel prices reinforces the agency’s description of tight product supplies, particularly diesel, as the main concern.
Looking ahead to next year, the agency sees global supply rising by 6.6 million barrels a day in 2027, to an average of 108.1 million barrels a day. It said the market would return to surplus in the fourth quarter of 2026, with a larger buildup expected during 2027. Reuters reported that the agency expects 71 million barrels from emergency reserves that countries pledged in March to be made available by the end of February 2027. The volume includes 15 million barrels of diesel aimed at easing tight market conditions. The U.S. Energy Information Administration also forecast that global inventories would begin rising in the fourth quarter of 2026, after falling by an average of 1.2 million barrels a day in the third quarter, and would increase by 3.5 million barrels a day in the first half of 2027.