IEA Says Oil Market Is Heading Into Surplus as Gulf Exports Reach 74% of Pre-War Levels

Since the U.S.-Iran war began on Feb. 28, the oil market has run on shortage. The International Energy Agency said Friday, Nov. 13, that this has flipped: global supply is now outrunning demand.

In its monthly report, the Paris-based agency said fourth-quarter supply will average about 105 million barrels a day, roughly 1.7 million above demand. A month ago it projected a deficit of similar size. "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 IEA said.

Gulf exports lead the rebound

Gulf oil exports, excluding Oman, hit 18.4 million barrels a day in October. That is about 26% below pre-war levels, or 74% of them. Crude alone reached 15 million barrels a day, 82% of pre-war volume.

Global supply rose 2.3 million barrels a day in October to 105.4 million, after a 3 million increase in September. Saudi Arabia lifted crude output to 10 million barrels a day. OPEC said OPEC+ pumped 41.23 million barrels a day in October, up about 2.04 million from September and 97% of its February volume.

Demand is the other side of the equation. The IEA expects 2026 demand to fall by 2.7 million barrels a day to 102.3 million. "Gulf exports recovered much faster than global oil demand," the agency said.

JPMorgan's Natasha Kaneva put Middle East oil transits at 20.7 million barrels a day last week, against 24.7 million before the war and a low of 9.8 million in March. Kpler data put flows at about 70% of the pre-war average over the same stretch. The figures differ because they measure different things, but they point the same way.

Stocks and prices

Observed global inventories rose 52 million barrels in October, the first monthly gain since June. Oil held at sea accounts for that, up 86 million barrels as Gulf cargoes moved.

On land, the picture is worse. OECD stocks fell 47 million barrels in October and remain at their lowest level since at least 2016. Observed global stocks are down a cumulative 462 million barrels since the war began.

The IEA now sees a 2026 average deficit of 685,000 barrels a day, down from 1.7 million in last month's report. It also raised its 2026 supply estimate by 920,000 barrels a day.

Prices have already moved. Brent futures settled at $94.62 on Nov. 4, down 8.7% in a day. According to CNN, oil traded above $100 every day in October and reached a four-year high of $114 on the last trading day of the month, then fell about $25 and briefly dipped below $90 on Tuesday, Nov. 10. Bloomberg's account of the IEA report put benchmark crude down about 18% this month.

Brent is still above the roughly $72 close on Feb. 27, the day before the war started.

Politics versus fundamentals

Democrats flipped the House and Senate in the Nov. 3 midterms. Vice President JD Vance blamed the Iran war for Republican losses, and President Donald Trump told reporters Vance's assessment was largely true because the war drove up gasoline prices. ING analysts Warren Patterson and Ewa Manthey wrote on Nov. 5 that the Democratic win raised hopes for a quicker end to the conflict. The new Congress does not take office until January, they noted, leaving room for escalation.

CNN's analysis argues that politics and Trump's shift away from renewed strikes are only part of the price drop. The report's supply-and-demand numbers, it said, show the market returning to fundamentals. The IEA itself tied lower prices to both the Gulf rebound and signs that Trump may hold off on renewed military action.

What could still go wrong

The IEA warned that further attacks on shipping could undermine the recovery, and tankers are still being hit. June Goh, senior oil analyst at Sparta Commodities, said more volatility is likely because the path to a diplomatic end remains uncertain and strategic reserves have been drawn very thin. Social media reports on Friday of U.S. airstrikes near Sirik and explosions in Bandar Lengeh, southern Iran, remain unconfirmed.

Products are the weak link. The IEA said the outlook for gasoil and diesel has "marginally improved" as high prices curbed consumption. Newsquawk's read of the report is that product markets, not crude, are the binding constraint, and that diesel margins can stay firm even while crude weakens.

Pump prices show the lag. The national average for regular gasoline was $4.10 on Nov. 5, per AAA, versus about $3.08 a year earlier. Diesel averaged $6.29 for the week ended Nov. 2, per the Federal Reserve Bank of St. Louis. GasBuddy's Patrick De Haan said gasoline could fall to $3.65 and diesel to $5.50 in the weeks ahead, based on the Nov. 4 wholesale close.

The IEA said its members will accelerate the release of remaining pledged emergency stocks, a further 71 million barrels through the end of February, including 15 million barrels of diesel. Whether that, plus rising Gulf runs, is enough to ease diesel tightness before winter remains an open question.

The agency also lowered its 2027 supply outlook because of constraints on Iranian oil shipments.