Global oil markets swung into surplus in October for the first time since the US-Iran war began, as Gulf shipments surged. Analysts warn that rebuilding depleted stockpiles will take months, and refined products remain tight.
Global oil markets have swung into surplus this autumn for the first time since the US-Iran war began. Analysts warn, however, that it will take months to rebuild depleted stockpiles.
Supply outstrips demand by almost 2 million barrels a day
Oil supplies outstripped consumption by almost 2mn barrels a day in October, according to the International Energy Agency (IEA). The agency previously reported a slim deficit for September but has since revised the figure to a 600,000 b/d surplus.
A surge in shipments from the Gulf underpinned the turnaround, despite an uptick in Iranian attacks on shipping. Producers elsewhere also pumped more oil, while consuming nations used less.
According to the IEA: "The oil market is showing tentative signs of rebalancing," in a report published on Friday. The agency expects markets to remain in surplus in the fourth quarter of this year and throughout next year.
Inventories rise for the first time since June
Observed oil inventories rose by an average of 1.7mn b/d in October, the first increase since June. They had fallen by 1.9mn b/d over the previous three months.
Weaker demand also helped. The IEA forecasts consumption will fall by 2.7mn b/d in 2026 before rebounding by 2mn b/d next year.
Dated Brent, the physical oil benchmark, is priced around $95 a barrel, having traded at $136 a barrel in early October.
Refined products stay tight
A surplus in crude does not mean consumers have escaped the disruption. Most of the extra oil is crude, which supplies refineries with feedstock but does not immediately alleviate shortages of refined products, because refining capacity is short. Prices of some products, such as jet fuel and diesel, have stayed stubbornly high.
Spencer Dale, a professor at the London School of Economics, said that weakness in crude prices does not necessarily ease pressure on households and businesses if refining shortages remain. Analysts say refined-product stockpiles have been eroded far more than crude and will need many months of surpluses to recover.
Source: Financial Times
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