The International Energy Agency (IEA) said the global oil market is set to swing into oversupply for the first time since the Iran war broke out, as Persian Gulf oil exports recover amid the ongoing conflict.
In its monthly report, the agency that advises major economies said: "The oil market is showing initial signs of rebalancing, with global oil supply exceeding demand for the first time since the Iran war began."
The IEA said that despite persistent attacks on tankers, Persian Gulf oil exports have recovered to 74% of pre-war levels, driven by a surge in shipments from Saudi Arabia and fellow OPEC member Iraq.
The agency also said observable oil inventories rose in October for the first time since June.
The IEA sharply raised its forecast for global oil supply in 2026 by 920,000 barrels per day.
Although the global market will still post a supply deficit for the year as a whole due to war-related production disruptions, the annual shortfall is 60% lower than projected in last month's report.
Rebounding Middle East supply, combined with signs that U.S. President Donald Trump may not take military action against Iran again, helped push oil prices lower.
Benchmark crude prices have fallen about 18% this month, easing the pressure that high fuel costs have placed on consumers and central banks.
The Paris-based IEA said the outlook for the gasoil and diesel markets has "improved slightly" because high prices have curbed consumption.
Previously, these two markets had become a major economic concern and a matter of intense focus for the U.S. president himself.
The report said IEA member countries will accelerate the release of remaining emergency oil reserves pledged earlier this year, and will release an additional 71 million barrels by the end of February next year.
Last month, European countries pledged to speed up the release process after the United States criticized Europe for acting too slowly.
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