JPMorgan Sees Oil Market Flip to 1.4 Million B/D Surplus in October

Global oil supply exceeded demand by 1.1 million b/d in September, and the surplus widened to 1.4 million b/d in October, according to JPMorgan estimates — a reading that puts the bank nearly 1.9 million b/d away from the International Energy Agency's view of the same market.

IEA's Oct. 14 Oil Market Report, by contrast, estimated a supply deficit of about 790,000 b/d for September and projected continued deficits through yearend. Two closely watched assessments, two opposite verdicts. Somebody's numbers are wrong, and the gap shows how hard the post-conflict balance has become to read.

Why do the two estimates disagree?

The divergence likely reflects differences in supply and demand estimates, inventory coverage, and reporting cutoffs, the competing reports suggest. The IEA's data still pointed to tightening physical markets: global observed oil stocks fell by about 10 million bbl in September, as a 113 million bbl draw from onshore inventories more than offset a 103 million bbl build in oil on water. By end-September, global observed inventories sat 509 million bbl below end-February levels.

IEA's October outlook projected a fourth-quarter supply deficit of about 1.8 million b/d, built on global supply of 101.7 million b/d against demand of 103.5 million b/d. That is the deficit case; JPMorgan's export-tracking says the market already flipped months ago.

The takeaway: the dispute turns on how much Middle East barrels have actually come back — and how fast demand has fallen.

How far have Middle East exports recovered?

JPMorgan estimated Middle Eastern oil exports recovered to about 20.7 million b/d in October, up from a low of 9.8 million b/d in March, though still below prewar levels. Global crude imports reached 44.9 million b/d, up 1.3 million b/d year over year.

The IEA tracked a narrower category — Gulf crude exports — and found them up 4.4 million b/d to 13.9 million b/d in September, more than 75% of prewar levels.

Supply growth outside the region helped too. JPMorgan estimated Latin American crude production rose by about 1.5 million b/d year over year, supported by gains in Brazil, Venezuela, Guyana, and Argentina.

Demand tells the other half of the story. Global oil consumption has fallen an estimated 3.3 million b/d since the conflict began in late February, as elevated fuel prices and supply disruptions bit into consumption.

But barrels of crude are not barrels of product. IEA cautioned that refined product supplies remain severely constrained: Middle Eastern refined product and LPG shipments are still below half their prewar levels.

In plain terms: crude is coming back faster than diesel and gasoline.

What happens through 2027?

For 2026, IEA forecast global supply averaging 100.7 million b/d — down 5.8 million b/d from 2025 — with demand declining 2.6 million b/d to 102.4 million b/d.

The agency expects a substantial supply recovery the following year, with global production rising 7.7 million b/d to 108.3 million b/d in 2027, against demand growth of 2 million b/d to 104.4 million b/d. Those figures imply a return to surplus in 2027 — though IEA warned diesel markets could stay tight well into the year on depleted inventories and continued refining disruptions.

Separately, HSBC raised its fourth-quarter 2026 crude production forecast for Saudi Aramco to 8.3 million b/d from 6.3 million b/d, citing a faster-than-expected export recovery. The bank also lifted its 2027 forecast to 9.8 million b/d from 8.8 million b/d and expects Saudi output to approach 10 million b/d by mid-2027.

What did prices do?

Oil prices fell more than 8% on Nov. 4 as investors weighed the outcome of the US midterm elections, which gave Democrats control of both chambers of Congress. Analysts read the result as raising political pressure on President Donald Trump to seek a diplomatic resolution to the Iran conflict — potentially shaving the geopolitical risk premium out of crude prices.

The watch item: whether physical inventories confirm JPMorgan's surplus or the IEA's deficit first.