The world oil market is swinging back into surplus for the first time since the Iran war began, the International Energy Agency said on Friday, as crude exports from the Persian Gulf recover faster than demand. In its monthly Oil Market Report, the Paris-based agency forecast global supply of 105 million barrels a day in the fourth quarter, 1.7 million barrels a day more than it expects the world to consume, according to Reuters. A month earlier it had pencilled in a fourth-quarter deficit.

For Asia, which buys most of the crude that passes through the Strait of Hormuz, the shift matters on two fronts. A surplus points to softer prices for refiners in China, India, Japan and South Korea heading into 2027. It also eases pressure on import bills for oil-dependent economies such as India, Japan and South Korea. The agency said the market was "showing tentative signs of rebalancing," and Xinhua reported that observed oil inventories rose by 52 million barrels in October.

Brent crude barely moved on the report. The global benchmark was down 0.1% at $95.71 a barrel shortly after its release, Reuters reported.

OPEC+ output nears prewar levels

The supply recovery is coming mainly from the Gulf. OPEC+ pumped 41.23 million barrels a day of crude in October, OPEC said in its own monthly report on Wednesday, up about 2.04 million barrels a day from September. Reuters calculated that this equals about 97% of the group's February volume, before the fighting started.

Gulf producers have relied on workarounds to keep cargoes moving. Reuters said these include "dark crossings" through Hormuz, in which tankers switch off their tracking signals. The U.S. Energy Information Administration, in its own outlook published on Nov. 10, pointed to ship-to-ship transfers along Oman's coast that added supply in late October and early November. The EIA estimated Middle East crude shut-ins averaged 2.5 million barrels a day in October, down from a peak of 10.9 million barrels a day in May.

Outside the group, the IEA expects producers including the U.S., Canada, Brazil, Argentina and Guyana to add 1.6 million barrels a day of supply in 2026. It also said 71 million barrels of emergency stocks will be made available by the end of February, including 15 million barrels of diesel.

Not every forecaster sees the turn the same way. JPMorgan estimated the global market was already in a surplus of 1.4 million barrels a day in October, according to Reuters. The EIA said global inventories fell an average 1.2 million barrels a day in the third quarter and should start building in the fourth.

Demand takes a war-sized hit

High prices have cut into consumption. The IEA now expects world oil demand to fall by 2.7 million barrels a day this year to 102.3 million barrels a day, before rebounding by 2 million barrels a day in 2027. The EIA's figures are close: it projects global liquid fuels consumption will drop 2.0 million barrels a day in 2026 to 102.4 million, then rise by the same amount next year.

For 2027, the IEA sees global supply climbing 6.6 million barrels a day to 108.1 million barrels a day, led by the return of Gulf volumes. That is 1.1 million barrels a day below last month's forecast, partly because the agency cut its estimate for Iran, which is under a U.S. blockade. Even so, the agency projects a 2027 surplus of about 3.8 million barrels a day, only slightly smaller than the 3.94 million it forecast in October.

That outlook is already showing up in price forecasts. The EIA expects Brent to average around $100 a barrel in November and December, then slip below $90 in the second quarter of 2027 and reach $77 by the fourth quarter. It puts the 2027 average at $86 a barrel, down from $97 this year. Brent spot first fell below $100 on Nov. 4, the EIA said.

What could upset the forecast

Both agencies flag the same weak point: the Gulf's export routes. The EIA expects Iranian exports to stay constrained through its forecast period and warned that Middle East flows remain exposed to disruption, which could make prices swing more than its monthly averages suggest. It assumes pipelines, overland bypass routes, ship-to-ship transfers and new UAE pipeline capacity due in 2027 will gradually reduce shut-ins.

Tanker attacks have already hit Asian buyers this year, including Iraqi cargoes disrupted by strikes around Hormuz. For refiners in the region, the near-term balance depends on whether those routes stay open through the northern winter.

The IEA's December report will show whether the surplus forecast holds. The EIA's next Short-Term Energy Outlook is due Dec. 8.

Correction, Nov. 14, 2026: An earlier version of this article attributed the figure of 41.23 million barrels a day of OPEC+ crude output in October to the IEA. The figure came from OPEC's monthly report, and the comparison with February volume was a Reuters calculation based on OPEC data.