IEA: Gulf oil exports recovered faster than demand grew, and the global oil market returned to oversupply in the fourth quarter

The Zhitong Finance App learned that the International Energy Agency (IEA) said on Friday that although attacks on ships in the Strait of Hormuz are still occurring, as oil exports from the Middle East recover faster than global oil demand, the global oil market will re-enter a state of oversupply in the fourth quarter of this year.

The IEA said in its monthly report that the average oil supply in the fourth quarter will reach 105 million barrels per day, 1.7 million barrels per day higher than expected demand. Previously, the IEA had predicted that there would be a supply gap in the oil market in the fourth quarter. The IEA said in its report: “The oil market is showing initial signs of rebalancing. For the first time since the war with Iran began, global oil supply has exceeded demand.”

The agency also further revealed that member states promised in March to release a record amount of remaining oil from emergency reserves, saying that by the end of February next year, 71 million barrels of oil will be put on the market, including 15 million barrels of diesel, to ease the tight supply situation in the market.

At the time this report was released, there were many signs that oil producers in the Gulf region were resuming exports. Oil exports from these countries have been disrupted since the war broke out at the end of February, causing disruptions to shipping in the Strait of Hormuz and damage to regional energy infrastructure, but transportation is currently being resumed through various alternatives, such as carrying out so-called “dark crossings” (dark crossings) through the Strait of Hormuz, that is, tankers turn off tracking signals to evade attacks.

The Organization of Petroleum Exporting Countries (OPEC) said on Wednesday that the OPEC+ Group, which includes allies such as the Organization of Petroleum Exporting Countries and Russia, reached 41.23 million barrels of crude oil per day in October, an increase of about 2.04 million barrels over September, which is equivalent to 97% of pre-war production in February.

Meanwhile, the IEA pointed out that after US President Trump reached a diesel supply agreement with Russia, Russian oil production and fuel exports both rebounded in October. Russia's oil production increased by 210,000 barrels per day in October compared to September, reaching 8.73 million barrels per day, the agency said. Russia's oil exports in October increased by 260,000 barrels per day compared to September, reaching 1.49 million barrels per day, the highest level since June. Among them, exports of light diesel (gasoil) doubled to 270,000 barrels per day.

Citing data from commodity data and analysis company Kpler, the IEA said that Russia's diesel and light diesel shipments reached 1.13 million tons in October, significantly higher than the 300,000 tons (equivalent to 2.25 million barrels) previously promised, including 240,000 tons to Turkey and 160,000 tons to Brazil.

However, since the US-Russia diesel supply agreement came to a standstill due to legal disputes and corporate concerns in the US, buyers were unwilling to accept related goods. In the end, no batch of diesel goods arrived in the US, and many tankers originally scheduled to sail in the US have changed course.

According to reports, five tankers carrying Russian diesel were previously sailing to the Atlantic coast of the United States. Among them, an oil tanker flying the Maltese flag, Agioi Fanendes was scheduled to arrive on November 7. However, the tanker stayed in the North Atlantic before reaching the east coast of the United States, and the ship was still carrying about 40,000 tons of ultra-low sulphur diesel.

Kpler said, “Since November 9, the tanker has been almost stationary, and its draft depth has always remained at 11 meters, which indicates that the cargo on board has not yet been unloaded. As there are currently no confirmed destinations, it is still uncertain where the ship will sail next.”

Two other tankers originally bound for the US — the Leruo, owned by the Chinese owner in Hong Kong, and the Russian tanker Talisman — also changed course last week. Industry insiders said that US oil companies are unwilling to accept these goods and are mainly concerned that related transactions will cause legal liability and reputational risks. After the Democratic Party won the midterm elections, companies are still worried that participating in the deal may lead to investigation by members of the new National Assembly.

Jeremy Paner, a former US sanctions official and current partner at law firm Hughes Hubbard & Reed, said that the cost savings from buying lower-priced Russian diesel may be offset by legal expenses arising from future congressional investigations. Jeremy Paner said, “It's relatively easy for businesses to make the decision 'we don't want to touch this shipment. '”