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The world's oil supply has moved ahead of demand for the first time since the war in Iran began, the International Energy Agency said on Friday, with global production surging to 105.4 million barrels a day in October as Gulf exports roared back and the price of crude fell by nearly a third from its wartime high.
For American households, the turn points to cheaper gasoline after months in which the war pushed fuel and shipping costs up — Brent crude, the international benchmark, has fallen 32 percent from $136 a barrel in early October to around $93. But the relief is not yet reaching every pump: diesel, the fuel that powers trucks, farm machinery and heating, is still trading near $180 a barrel, 77 percent above its pre-war level, because refineries and shipping have not recovered as fast as crude supply.
"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 its November Oil Market Report, published on Friday, November 13.
Supply rose 2.3 million barrels a day in October after a 3 million-barrel-a-day jump in September — a 5.3 million-barrel-a-day rebound since August. Observed inventories rose by 52 million barrels in October. Gulf exports, excluding Oman, reached 18.4 million barrels a day, though still 26 percent below pre-war levels. The IEA raised its fourth-quarter supply estimate by 3.3 million barrels a day and now expects supply to average about 105 million barrels a day in the final three months of the year, roughly 1.7 million barrels a day above forecast demand, with a larger surplus building in 2027. OPEC+ output rose to 41 million barrels a day in October, about 97 percent of its pre-war volumes.
Production from the United States, Canada, Brazil, Argentina and Guyana — the five producers the IEA groups as the Americas Quintet — is on track to rise by 1.6 million barrels a day this year, the agency said, with a further 1.1 million-barrel-a-day gain in 2027. In the United States alone, crude output rose by 1 million barrels a day to 14.013 million barrels a day in the latest weekly figures, and commercial crude inventories rose by 4.66 million barrels in the week to November 6.
Brent futures settled at $95.41 a barrel on Friday, down 2.4 percent on the week, while U.S. West Texas Intermediate closed at $88.52. Brent had touched $89.66 earlier in the week, its lowest since late August, after President Donald Trump told reporters the war with Iran was "effectively over." Before the war, Brent traded at about $72 a barrel in February; it reached $126 by the end of April and a high of $136 on October 8.
The IEA warned the recovery is fragile. Diesel remains the market's "overriding concern"; stocks held on land are at their lowest since at least 2016; and attacks on shipping continue — two supertankers were reportedly disabled by mine explosions in the Strait of Hormuz on November 11. The agency also said its members would speed up the release of emergency oil stockpiles pledged earlier this year, adding a further 71 million barrels to the market by the end of February, including 15 million barrels of diesel.
The war began on February 28, when the United States and Israel attacked Iran. The Strait of Hormuz, the channel carrying about a fifth of the world's oil, was largely choked off, Reuters reported, and tanker freight costs from the Gulf to Asia climbed above $37 a barrel, more than five times pre-war levels.
The IEA projects global supply recovering by 6.6 million barrels a day in 2027 to 108.1 million barrels a day, including a 5.3 million-barrel-a-day increase in Gulf production. Whether American drivers feel it at the pump will depend on whether diesel and shipping recover as fast as crude has — and on whether the fragile calm in the Gulf holds.