Russia's crude oil production rose in October to 8.73 million barrels per day, recording an increase of 210,000 barrels per day. At the same time, the recovery of shipments through the Gulf is driving the global oil market into a surplus for the first time since the outbreak of the conflict in the Middle East, according to what the International Energy Agency (IEA) announced on Friday, November 13.
Supply growth, yet constraints on diesel
Global supply and oil inventories have increased significantly. However, turmoil in the Middle East and attacks against Russian energy infrastructure continue to restrict diesel availability, as highlighted in the agency's latest monthly oil market report. "Ongoing attacks on Russian energy infrastructure continue to curb the country's diesel supply to international markets, adding to the losses caused by developments in the Middle East," the IEA states.
The Trump-Putin agreement on Russian diesel
On October 9, US President Donald Trump reached an agreement with Russian President Vladimir Putin regarding the supply of diesel to international markets. Subsequently, the Office of Foreign Assets Control (OFAC) of the US Treasury Department issued a general license permitting specific transactions involving Russian-origin diesel until April 7, 2027.Crude oil supply can, therefore, increase even while diesel availability remains constrained, as refining capacities and exports of petroleum products continue to face limitations.
Explosive increase in global supply and inventories
According to the IEA, global oil supply reached 105.4 million barrels per day in October, up by 2.3 million barrels on a daily basis compared to September. The agency underscored that since August, supply has been boosted by an impressive 5.3 million barrels per day, despite ongoing attacks on energy infrastructure and tankers.Inventories also posted an increase, for the first time since June. Observed global stocks rose by 52 million barrels in October, a volume corresponding to 1.7 million barrels per day.
First surplus since the outbreak of the war in Iran
"The oil market is showing tentative signs of rebalancing, as global supply outpaced demand for the first time since the outbreak of the war in Iran," IEA analysts noted. Increased export flows have boosted supply expectations for the fourth quarter. Losses from the Middle East and Russia are partially offset by increased production in the US, Canada, Brazil, Argentina, and Guyana. These five countries are expected to collectively increase their oil production by 1.6 million barrels per day over the course of the year.
New upward revision by the IEA
Simultaneously, the IEA revised upward by 3.3 million barrels per day its estimate for fourth-quarter oil supply. It now forecasts that global supply will grow by 6.6 million barrels per day in 2027.
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