MARKET NEWS

By Alex Lawler

LONDON, Nov 13 – The world oil market will return to a surplus in the fourth quarter of this year, the International Energy Agency (IEA) said on Friday, as Middle East exports recover faster than global oil demand despite continued attacks on shipping.

The agency also provided further details of the remaining volumes from a record release of oil from its members' emergency reserves pledged in March. It said 71 million barrels would be made available by the end of February, including 15 million barrels of diesel to ease market tightness.

Oil supply will average 105 million barrels per day in the fourth quarter, the Paris-based agency, which advises industrialised countries, said in its monthly report. This is 1.7 million bpd higher than forecast demand. The IEA had previously forecast a supply deficit for the period.

"The oil market is showing tentative signs of rebalancing, with global oil supplies surpassing demand for the first time since the outbreak of the war in Iran," the agency said in the report.

Oil prices reversed earlier gains following the release of the IEA report at 0900 GMT. Brent crude was last down 0.1% at $95.71 a barrel.

The report follows signs that Gulf oil producers are recovering exports disrupted since the start of the war in late February. Producers have been using workarounds, including so-called dark crossings through the Strait of Hormuz, where tankers switch off tracking signals to evade attacks.

The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries and allies such as Russia, pumped 41.23 million bpd of crude in October, OPEC said on Wednesday. This was an increase of about 2.04 million bpd from September and represented 97% of the pre-war February volume.

Other Analysts See Signs of Surplus

Other analysts have also forecast a return to excess supply, despite the lack of a resolution to the Iran war and continuing tanker attacks in the Gulf. JPMorgan last week forecast a global surplus of 1.4 million bpd in October.

High oil prices have also curbed demand this year, helping tip the balance into a surplus. World oil demand is forecast to fall by 2.7 million bpd in 2026 to 102.3 million bpd before rebounding by 2 million bpd in 2027, the IEA said. The forecasts were little changed from its previous estimates.

In addition to rising output from OPEC+, the IEA highlighted increasing supply from producers outside the group.

Production from the United States, Canada, Brazil, Argentina and Guyana will rise by 1.6 million bpd this year, the agency said.

In 2027, global supply is projected to increase by 6.6 million bpd to 108.1 million bpd, led by a further recovery in Gulf output.