The global oil market has moved back into surplus after months of disruption caused by the US-Israeli war with Iran, JPMorgan said in a note on Wednesday, November 4 — a turning point that helps explain why crude prices have been sliding even while the Strait of Hormuz remains contested. HSBC, in parallel, raised its forecasts for Saudi Aramco's crude oil production, citing a faster-than-expected recovery in Saudi exports.
Source: Reuters
JPMorgan estimates the global oil market returned to a surplus of 1.1 million barrels per day in September, widening to 1.4 million barrels per day in October — yaani about 14 lakh barrels a day more oil being produced than consumed — nearly matching last year's average surplus of 1.3 million barrels per day. Inventories and trade flows both indicate that excess barrels are returning to the market, the bank said.
Source: Reuters
Middle East exports climb back
A key factor behind the shift has been the recovery in Middle Eastern oil exports to around 20.7 million barrels per day, from a low of 9.8 million barrels per day in March — the month after the war began at the end of February — although volumes remain below the levels seen before the Iran war began. Gulf producers have rerouted cargoes around the Hormuz disruption, through pipelines and alternative loadings, even as the strait itself stays dangerous: this week Iran's Revolutionary Guards said tankers had struck mines in the waterway, and a tanker was hit by projectiles off Limah, Oman.
Source: Reuters
HSBC: Saudi output recovering faster than expected
HSBC raised its fourth-quarter 2026 Saudi Aramco crude production forecast to 8.3 million barrels per day from 6.3 million — a jump of 2 million barrels a day in the bank's expectations — citing a faster-than-expected export recovery. It raised its 2027 production forecast to 9.8 million barrels per day from 8.8 million, and said it expects Saudi output to return to about 10 million barrels per day by mid-2027. Saudi crude exports in October recovered to about 7 million barrels per day, near pre-conflict levels, HSBC said, adding that recovering Middle East crude exports suggested supply disruptions from the conflict have eased.
Source: Reuters
Latin America fills the gap — and demand has shrunk
Rising output elsewhere has also contributed to the surplus. JPMorgan estimates Latin America alone has supplied about 1.5 million barrels per day more crude than a year ago, led by Brazil, Venezuela, Guyana and Argentina. On the other side of the ledger, the bank said global demand had fallen by an estimated 3.3 million barrels per day since the start of the conflict, as high fuel prices and supply disruptions curbed consumption — the war has destroyed demand even as it disrupted supply.
Source: Reuters
What is solid
- JPMorgan's Wednesday note puts the global oil market back in surplus: 1.1 million bpd in September, widening to 1.4 million bpd in October
- Middle East exports have recovered to about 20.7 million bpd from March's 9.8 million bpd low, and HSBC raised its Q4 Saudi Aramco output forecast to 8.3 million bpd from 6.3 million
- Brent crude fell again on Wednesday to $101.68 a barrel and US WTI to $94.34 in Reuters' 1310 GMT snapshot, as the Democrats' midterm sweep raised questions over the Iran war's future
What is only claimed
- The surplus figures are bank estimates built on inventories and trade flows, not official OPEC or IEA balances — other trackers differ, with Vortexa putting October Gulf exports lower than September's
- Exports have recovered even though the Strait of Hormuz itself remains mined and contested — flows depend on workarounds that a new escalation could break
Why prices still sit above $100
The surplus has not brought cheap oil. Brent has fallen from a six-month high above $117 a barrel at the end of October to around $101-$103 this week — including a fall on Wednesday after Democrats took control of both chambers of the US Congress, which investors read as raising oversight pressure on President Donald Trump's Iran war — but it remains far above pre-war levels, and the market still prices the risk that Hormuz, through which about a fifth of the world's oil and gas normally passes, closes completely. Ship transits through the strait are still down more than 90 percent from normal, by earlier UN-cited figures.
Source: Reuters
What it means for Punjab and the Gulf
For the lakhs of Punjabi and Indian workers in the Gulf, a recovering export economy means steadier work at ports, refineries and construction sites that slowed when cargoes stopped — but the same reports show their workplaces sit beside a strait where tankers are still hitting mines. For families in Punjab, every $10 on the Brent price flows into diesel, freight and the cost of the goods trucks carry; a durable surplus is the first real sign since February that the war's fuel shock is loosening, even though the war itself has not ended.
Source: Reuters
What happens next
The next hard test of the surplus story is official data and OPEC discipline: if recovering Gulf exports keep rising toward pre-war levels while demand stays 3.3 million barrels a day below its pre-war path, prices face further downward pressure — unless a new strike on Iran, a Hormuz closure or an OPEC cut intervenes. Traders are also watching Wednesday's US inventory report from the Energy Information Administration, the first hard look at American supply since the midterm vote.
Source: Reuters