SEATTLE (Oil Monster): The global oil market returned to surplus in September and widened further in October as Middle East exports recovered, crude flows increased and demand weakened, according to JPMorgan.
JPMorgan estimates global oil supply exceeded demand by 1.1 million barrels per day in September, with the surplus widening to 1.4 million bpd in October.
The October estimate is close to the average surplus of 1.3 million bpd recorded last year, according to the bank.
JPMorgan said inventory trends and international trade flows indicate that excess barrels are returning to the market.
Middle East oil exports recovered to approximately 20.7 million barrels per day in October from a low of 9.8 million bpd in March.
That represents an increase of about 10.9 million bpd from the March low, although exports remain below levels recorded before the conflict began in late February.
Global crude imports reached about 44.9 million bpd in October, up 1.3 million bpd from a year earlier.
The shift back into surplus is being driven from both sides of the market. Middle East exports have recovered sharply and Latin American producers are adding more supply, while JPMorgan estimates global oil demand has fallen by about 3.3 million barrels per day since the conflict began. That combination helps explain why more crude is returning to inventories and international trade flows even though security risks have not disappeared.
Additional supply outside the Middle East has also contributed to the changing global balance.
JPMorgan estimates Latin America is supplying approximately 1.5 million barrels per day more crude than a year ago, led by Brazil, Venezuela, Guyana and Argentina.
OilMonster has also reported that Venezuelan crude exports remained near 1.08 million bpd in October, still 21% higher than a year earlier despite recent signs of slower growth.
Also Read: Venezuela Oil Exports Hold at 1.08M Bpd as U.S. Shipments Fall
HSBC raised its fourth-quarter 2026 forecast for Saudi Aramco crude production to 8.3 million barrels per day from a previous estimate of 6.3 million bpd, citing a faster-than-expected recovery in exports.
The bank also increased its 2027 production forecast to 9.8 million bpd from 8.8 million bpd and expects output to return to approximately 10 million bpd by mid-2027.
Saudi crude exports recovered to around 7 million bpd in October, according to HSBC, approaching levels recorded before the conflict.
Also Read: Saudi Arabia, UAE Rebuild Crude Exports as Hormuz Recovers
JPMorgan's assessment represents one view of the current oil balance.
The International Energy Agency's October Oil Market Report still projected global supply deficits through the end of 2026, noting that observed oil inventories remained 509 million barrels below their end-February level at the end of September.
The difference highlights the uncertainty surrounding current supply, demand and inventory estimates as Middle East exports recover unevenly and shipping conditions remain volatile.
JPMorgan estimates the market had already shifted to a 1.1 million bpd surplus in September, while the IEA's October assessment still described the market as being in deficit through year-end. The gap is significant and shows why upcoming inventory, export and demand data will be important in determining whether the apparent surplus is sustained.
The key question is whether recovering Gulf exports continue to outpace demand and whether Saudi production approaches HSBC's revised targets.
Inventory data will also be critical. A sustained increase in crude stocks would provide stronger confirmation that the global market has moved from shortage into surplus.
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Courtesy: www.reuters.com
