BEIJING (dpa-AFX) - Escalation of attacks threatens to derail recovery in Middle East oil exports, says the International Energy Agency's Oil Market Report for October.
'A recovery in Middle East oil supply was well underway in September, with Gulf crude oil exports approaching pre-war levels. However, the recent escalation in attacks on regional energy infrastructure and tanker traffic is threatening to derail further gains. At the same time, record tanker rates raised crude delivery costs and eroded refinery margins. Brent crude futures have risen by 13 percent since the start of September to around $107/bbl. Physical markers have increased much more, with North Sea Dated up by 43 percent to $134/bbl and other North Sea grades trading up to $160/bbl,' says the report, published Wednesday.
IEA said that due to heightened security concerns amid increased Houthi attacks in the region in October, it has left the projections for the remainder of the year largely unchanged. As such, global oil supply is expected to average 101.4 million barrels a day over the second half of the year, up from 96.4 mb/d in the second quarter.
Refined product and LPG shipments from the Middle East have risen much more slowly than crude oil flows and remain below half of their pre-war levels.
World oil demand is forecast to fall by 2.5 mb/d in the fourth quarter and 2.6 mb/d on average in 2026, the report says. As the Middle East war manifests itself through restricted product availability, soaring fuel prices and a deteriorating economic outlook, the global demand for diesel will register 25 percent of the drop. A partial recovery, of 2 mb/d, will leave 2027 global oil use 620 kb/d, or 0.6 percent below 2025 levels.
Global oil supply is projected to post an average annual decline of 5.8 mb/d, to 100.7 mb/d, this year, before reversing course and rising by 7.7 mb/d in 2027. Renewed attacks in the Gulf leave the recovery fragile.
Global refinery runs are set to hit a seasonal low of 81.3 mb/d in October before rebounding to 84.6 mb/d by year-end. Record freight and crude costs crushed margins in Europe and Asia as well.
Record diesel prices are already having broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation, the report says.
Diesel markets remained under significant strain as prolonged supply disruptions forced counter-seasonal stock draws ahead of autumn refinery maintenance and peak winter demand. Global diesel exports in September were 700 kb/d lower, as a 1.3 mb/d loss from Russia and the Middle East was only partly offset by higher supply from other sources.
Crude stocks in non-OECD countries slumped by 76 million barrels, with China accounting for 78 percent of the decline, according to IEA.
Despite lower demand, oil market balances are forecast to remain in deficit through the end of the year, with constrained middle distillate supplies likely to persist well into 2027.
IEA's latest Oil Market Report comes amid reports that President Donald Trump is planning to resume attacks on Iran ahead of the upcoming midterm elections.
The Pentagon has developed new military operation plans, including potentially using the so-called 'mother of all bombs' to target Iranian energy infrastructure and nuclear sites, CNN reported Thursday, quoting US officials familiar with the matter.
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