Amid the ongoing turmoil of the Iran war, the global oil market is exhibiting renewed signs of oversupply. Elevated oil prices have dampened demand, while oil exports from the Middle East are gradually rebounding. According to estimates from J.P. Morgan, the global oil supply surplus in October was around 1.4 million barrels per day. Nonetheless, the recent series of attacks on oil tankers in the Strait of Hormuz has heightened market concerns about potential disruptions to supply from the Middle East.
The conflict erupted at the end of February, significantly hampering oil exports from the region and overturning initial expectations of an oversupply that had been anticipated at the start of the year. With exports now increasing and demand weakening, the balance of supply and demand in the global oil market is shifting once again, although the risks associated with the ongoing fighting and transport remain unresolved.
As of the morning trading session in Asia on November 6, January-delivery Brent crude futures were priced at $99.86 per barrel, and West Texas Intermediate (WTI) futures were quoted at $91.62 per barrel, both reflecting increases of 1.6% and 1.22%, respectively. However, these prices still represent a decline of approximately 12% for the week.
Following the Democratic Party’s victory in the recent U.S. midterm elections—where they secured control of both the Senate and the House—the market anticipated a potential de-escalation in military actions between the United States and Israel against Iran. This led to an 8% drop in oil prices on Wednesday, pushing them to a two-month low. Nonetheless, the rebound in oil prices occurred later due to the surge in attacks on tankers in the Gulf region.
In a report dated November 4, J.P. Morgan indicated that the global oil market saw a return to a supply surplus of approximately 1.1 million barrels per day in September, which expanded to 1.4 million barrels per day in October—nearly equivalent to last year’s average surplus of 1.3 million barrels per day.
The report highlighted that, despite an increase of about 1.3 million barrels per day in global crude oil imports compared to the same month last year—totaling 44.9 million barrels per day—oil demand is still sluggish. J.P. Morgan estimated that since the onset of the Iran war, global oil demand has decreased by approximately 3.3 million barrels per day, primarily influenced by high fuel prices and supply chain disruptions.
Goldman Sachs also noted that global oil inventories, which saw a significant decline in the early days of the conflict, did not continue to drop from September to October. The market is roughly maintaining a balance between supply and demand.
The estimates from J.P. Morgan reveal that Middle Eastern oil exports rebounded from 9.8 million barrels per day in March to around 20.7 million barrels per day, although this figure remains below levels recorded before the outbreak of the war at the end of February.
Other regions are also contributing to increased supply, with crude oil from Latin America rising by about 1.5 million barrels per day compared to the previous year, predominantly driven by increased output from Brazil, Venezuela, Guyana, and Argentina.
Due to a quicker-than-expected recovery in exports, HSBC has raised its forecast for Saudi Aramco’s crude oil production in the fourth quarter of 2026, increasing it from 6.3 million barrels per day to 8.3 million barrels per day.
HSBC indicated that Saudi Arabia’s crude oil exports had recovered to roughly 7 million barrels per day in October, approaching pre-war levels.
Data from vessel tracking company Vortexa showed that oil and condensate exports from the Gulf region averaged 14 million barrels per day in October, which is about 86% of pre-war figures. However, exports of refined petroleum products averaged a mere 3.1 million barrels per day, just slightly above half of normal levels.
According to reports by Reuters, there was a notable surge in attacks on tankers in the Gulf region and the Strait of Hormuz on Wednesday and Thursday, with Iran claiming that three additional tankers were targeted on Thursday.
The UK Maritime Trade Operations (UKMTO) reported that the frequency of attacks remains near historical highs.
Daniel Hynes, a senior commodity strategist at ANZ, commented on Friday that oil prices saw a rebound as traders considered Wednesday’s sell-off to be excessive. He noted, “Iran still controls the Strait of Hormuz and is unlikely to relinquish that control.” He also pointed out that the overall transport volume through the Strait is still less than 60% of its total capacity.
Market signals paint a mixed picture: short-term Brent crude spread contracts shifted to a “contango,” often indicating ample spot supply; however, Brent futures for delivery starting in January 2027 still reflect a “backwardation,” suggesting that medium-term supply remains tight.
The U.S. Energy Information Administration (EIA) reported that for the week ending October 30, U.S. commercial crude oil inventories (excluding the Strategic Petroleum Reserve) decreased by 865,000 barrels, bringing the total down to 400.976 million barrels, a year-on-year decline of 11.408 million barrels.