The International Energy Agency (IEA) published a monthly report on Friday, noting a key shift in the global energy market: for the first time since the war in Iran began, global oil supply has exceeded demand. According to the Paris-based agency, the market is showing "cautious signs of rebalancing," but the recovery is uneven. While crude oil is returning to pre-war flows, the refined products segment—primarily diesel fuel—continues to face an acute shortage, keeping prices high for end consumers in Europe.
Diesel shortage — the market's main problem
Despite the overall supply-demand surplus for crude oil, the IEA identified the lack of diesel fuel as the "market's main problem." According to the agency, diesel prices in Europe remain 77% higher than pre-war levels. One reason for the persistent shortage, the IEA notes, is ongoing attacks on Russian energy infrastructure, which disrupt diesel exports from the country and exacerbate supply losses in the Middle East. To mitigate the situation, the agency recommends faster releases of emergency diesel stockpiles in the coming months, which would help compensate for the shortage while refineries recover their operations.
Sharp decline in oil prices from October peak
In recent weeks, quotes have corrected downward significantly. The price of North Sea Dated crude fell by 32% from an October peak of $136 per barrel to approximately $93 at the time of the IEA report. European diesel prices fell by 11% in the same period, dropping to nearly $180 per barrel. Thus, even with the decline in absolute figures, diesel fuel prices remain many times higher than levels established before the conflict, confirming that the imbalance in the refined products segment is structural rather than temporary.
Recovery of exports from the Persian Gulf
Despite ongoing attacks on tankers, oil exports from Persian Gulf countries (excluding Oman) reached 18.4 million barrels per day in October. This is still 26% below pre-war levels, but the trend is one of recovery. The IEA notes that crude oil led the recovery, while exports of refined products and liquefied petroleum gas from the Gulf remained at about half of pre-war volumes. In quantity, global oil supply increased by 3 million barrels per day in September and by another 2.3 million in October, reaching 105.4 million barrels per day.
Demand forecast and long-term trends
The IEA expects global oil supply to exceed demand in the fourth quarter but warns that ongoing attacks on maritime shipping could derail the recovery. According to the agency's forecast, global oil demand will contract by 2.7 million barrels per day this year, to 102.3 million, as high fuel prices and export disruptions from Gulf countries weigh on consumption. By 2027, the IEA projects a recovery in demand, but only slight growth in motor fuel consumption: more drivers are switching to electric vehicles and cars are becoming more fuel-efficient, which structurally limits the growth of demand for refined products.
Risks and market conclusions
The IEA report's bottom line can be summarized as a "cautiously optimistic" scenario: the primary oil market has begun to rebalance, but refining and logistics for petroleum products remain vulnerable. The agency identifies further attacks on maritime transport and continued disruptions to Russian diesel exports as key risks. For European consumers, this means that even if crude oil quotes fall, diesel fuel prices will remain significantly higher than pre-war levels in the coming months until refinery operations recover and emergency reserves are deployed.
