Oil Prices Crash 32% From $136 Peak as IEA Forecasts Global Supply Surplus Despite Iran War

Key takeaways

• Oil prices plunge 32% as Gulf exports recover
• IEA forecasts global oil surplus despite Iran conflict
• Diesel shortages persist even as crude prices collapse

Oil prices have plunged 32% from their October peak as the International Energy Agency (IEA) forecasts a return to global oversupply despite continued attacks on energy infrastructure and tankers during the Iran war.

North Sea Dated crude, a physical oil benchmark, dropped from $136 per barrel on October 8 to approximately $93, according to the IEA's November Oil Market Report, released Friday.

Brent futures traded near $95.54, while US West Texas Intermediate (WTI) hovered around $88.18. The benchmarks were heading for a second consecutive weekly decline after the earlier historic oil price crash.

<iframe src=”https://widgets.coincodex.com/w/a6628636-8fd3-4a10-b0c5-6b55f637982a?site=coinpaper&mode=light” width=”100%” height=”420” frameborder=”0” referrerpolicy=”no-referrer-when-downgrade” style=”border:0;background:transparent;border-radius:0px;”></iframe>IEA Forecasts Oil Surplus as Gulf Production Rebounds

The IEA expects global oil supply to exceed consumption during the fourth quarter of 2026, reversing the shortages that dominated markets earlier this year.

Global production increased by 2.3 million barrels per day in October to 105.4 million, following September's three-million-barrel increase.

Gulf crude exports recovered to 15 million barrels daily, reaching approximately 82% of prewar levels despite ongoing shipping disruptions.

The rebound follows OPEC+ production recovering, with Saudi Arabia contributing significantly to the recent increase.

Meanwhile, global demand is projected to decline by 2.7 million barrels per day in 2026 to 102.3 million, reflecting elevated energy prices and disrupted industrial activity.

The IEA expects a two-million-barrel-per-day demand recovery in 2027, but supply is projected to rise faster, reaching 108.1 million barrels daily.

Oil Inventories Rise 52 Million Barrels, but Diesel Remains Expensive

The supply recovery has already begun affecting global inventories.

Observed oil stocks increased by 52 million barrels in October, their first monthly expansion since June, as oil held at sea surged by 86 million barrels.

However, onshore inventories continued declining and remain at their lowest level since at least 2016.

The divergence helps explain why the latest IEA assessment differs from the earlier EIA forecast for Brent near $100.

The physical market is improving unevenly. European diesel prices remain near $180 per barrel, approximately 77% above prewar levels, despite crude's 32% decline.

Refining disruptions and restricted diesel exports continue affecting fuel availability even as additional crude reaches global markets.

Oil Price Forecast: Could Brent Fall Further?

The IEA's forecast suggests downward pressure could persist as Gulf exports normalize and inventories recover.

However, the outlook remains vulnerable to renewed attacks on energy infrastructure, including shipping routes near the Strait of Hormuz.

Previous Iran war escalation concerns demonstrated how quickly geopolitical developments can affect crude prices.

The market has also responded sharply to US-Iran diplomatic developments, with expectations of reduced military escalation accelerating November's selloff.

A sustained Brent recovery above $100 would require stronger demand or renewed supply concerns, while persistent oversupply could put the $90 region under pressure.

The latest report also contrasts with the earlier OPEC+ supply freeze, showing how changing export flows can outweigh production-policy announcements.