The global oil market is showing renewed signs of oversupply, with high crude prices suppressing consumption and weakening earlier expectations of a supply deficit, according to assessments by Goldman Sachs and JPMorgan.
JPMorgan estimates that the market moved into a surplus of 1.1 million barrels per day in September, before widening to 1.4 million bpd in October. The bank said the October surplus was approaching last year's average of 1.3 million bpd, signalling a significant shift in the global supply-demand balance.
Goldman Sachs, however, assessed the market as broadly balanced in September and October, citing the recovery in crude exports from the Persian Gulf despite increased security threats to shipping through the Strait of Hormuz.
The bank also reported that it found no evidence of a decline in global oil inventories over the two-month period. This contrasts with the stock drawdowns recorded in previous months, which had helped support fuel prices.
The changing market outlook comes as high crude prices increasingly weigh on consumption. The International Energy Agency (IEA), in its October Oil Market Report, estimated that global oil demand would contract by 2.6 million barrels per day this year.
The agency also estimated that global oil supply recovered by 2.5 million barrels per day in September. However, it projected an annual supply decline of 5.8 million bpd, bringing total production to 100.7 million bpd.
Despite the emerging surplus, crude prices remain considerably higher than their levels at the beginning of the year. Physical oil prices have also stayed elevated, reflecting the continuing premium associated with the Iran war and risks to energy shipments, although market concerns eased somewhat following the Democratic Party's sweeping victory in the U.S. midterm elections.
Oil movements through the Strait of Hormuz have recovered substantially from wartime disruptions, but the restoration remains incomplete. Vortexa estimated that flows through the strategic waterway reached 14 million barrels per day, including condensates, representing approximately 86% of pre-war levels.
However, October shipping data showed that Middle Eastern seaborne oil exports declined slightly from their recent post-war highs as security threats in the Strait of Hormuz intensified. Analyst George Morris noted that the heightened risks were weighing on export volumes.
The security situation remains a concern for the market, with five tanker attacks reportedly recorded since Sunday, adding pressure to shipping operations despite the gradual recovery in regional exports.
The contrasting assessments from Goldman Sachs and JPMorgan highlight uncertainty over how quickly the global oil market is moving towards a sustained surplus. While recovering supply flows are increasing the volume of crude available to buyers, weaker consumption and persistent geopolitical risks continue to shape price expectations.
