How large is the oil-market surplus?

  • JPMorgan estimates that global oil supply again exceeded consumption in September, with a surplus of 1.1 million barrels per day. In October, the surplus widened to 1.4 million barrels per day, close to the annual average of 1.3 million barrels per day in 2025.
  • Trade flows also reflect increased crude supply: global crude imports averaged 43 million barrels per day in September, up 500 thousand barrels per day year over year; in October, they rose to 44.9 million barrels per day, up 1.3 million barrels per day year over year.

Why is there already a surplus if supply has not fully recovered?

  • Middle East oil flows rebounded from a low of 9.8 million barrels per day in March 2026 to about 20.7 million barrels per day at the time of the report. Although still below the prewar average of 24.7 million barrels per day, this has returned a substantial amount of previously missing supply to the market.
  • Latin American crude supply filled part of the gap: the region delivered about 1.5 million more barrels of crude per day to the global market than a year earlier, with Brazil contributing about 800 thousand barrels per day.
  • The decline in demand was also key. JPMorgan estimates that global oil consumption fell by 3.5 million barrels per day year over year in October; record-high refined-product prices and supply disruptions forced consumers to reduce usage, helping to absorb supply shortfalls in refined products, liquefied petroleum gas and petrochemical products.

Why are crude inventories in surplus while refined-product inventories remain low?

  • JPMorgan says the world has largely replaced the missing crude oil, but other regions lack sufficient refining and processing capacity to replace Middle East losses of products such as diesel, gasoline and liquefied petroleum gas to the same extent.
  • Crude inventories therefore stabilized after a sharp decline in August and began to recover in September; refined-product inventories, by contrast, have continued to fall since February. The bank estimates that refined-product inventories were flat to slightly lower in October, at about 3 billion barrels, near the bottom of the historical seasonal range; globally, observable data on refined-product inventories remain very limited.

How does the surplus affect oil prices?

  • JPMorgan says the physical market’s return to surplus, together with news that the US and Iran may reach an agreement, is weakening the premium in oil prices.
  • The report says Brent crude fell from 118 dollars per barrel on the previous Friday to 103 dollars on Tuesday. Compared with the bank’s estimated fair value of 94 dollars per barrel, the premium narrowed from 24 dollars to 9 dollars.