PARIS, France / RankWire.AI / – The global oil market will return to a surplus in the fourth quarter of 2026 as Gulf exports recover, with a larger build expected in 2027, the International Energy Agency said in its monthly report on Friday, November 13. World oil demand is forecast to fall by 2.7 million barrels per day this year to 102.3 mb/d, before rebounding by 2 mb/d next year.
Global supply rose by a further 2.3 mb/d to 105.4 mb/d in October, after a 3 mb/d gain in September, the IEA said. Higher Gulf exports drove the increase despite continued attacks on energy infrastructure and tankers. Observed inventories rose by 1.7 mb/d in October as exports recovered faster than demand. The agency sharply raised its fourth-quarter supply forecast. Supply had fallen sharply earlier in the year when the war disrupted Gulf output.
Surplus to widen next year
Supply is projected to fall by 4.8 mb/d in 2026 before climbing by 6.6 mb/d to an average 108.1 mb/d in 2027. The IEA trimmed its 2027 supply outlook because of constrained Iranian shipments. Reuters reported that the agency sees a surplus of about 1.7 mb/d in the fourth quarter and around 3.8 mb/d in 2027, slightly below last month’s 3.94 mb/d estimate. The 2027 surplus would mark a substantial build in global stocks.
Demand has been weighed down by disruptions to Gulf exports of refined products and LPG, which remain at roughly half of prewar levels, and by high fuel prices. The year-on-year decline is set to ease to 2.7 mb/d in the fourth quarter from declines of 5 mb/d in the second quarter and 3.8 mb/d in the third, an average of 4.4 mb/d across those two quarters.
Road fuels lag the recovery
Demand is expected to return to growth around March next year. Petrochemical feedstocks, including LPG, ethane and naphtha, will account for almost 80% of 2027 gains as supply chains normalize. Road fuel demand will rise only modestly, as high prices speed up electrification and fuel efficiency in the global vehicle fleet. U.S. drivers felt that pressure when diesel hit a record $5.88 a gallon. Transport fuels will see very modest gains, the IEA said.
The IEA cautioned that downside risks persist, as attacks on shipping undermine maritime security, which it called pivotal to a sustained recovery. Tanker traffic through the Gulf has faced repeated threats since the start of the war with Iran. Producers in OPEC+ held their oil output targets steady earlier this month as shipping risks lingered. The agency said those risks remain the main threat to its forecast. Shipping through the Strait of Hormuz has been heavily disrupted since February.
The return to surplus marks a turning point after months of tight supply that kept prices elevated. A larger build in 2027 could ease pressure on fuel costs for consumers and businesses. However, the outlook depends heavily on the security of Gulf shipping routes and on how quickly exports from the region continue to recover in the months ahead. The IEA will publish its next monthly report in December.