Oil is getting cheaper amid easing concerns about supplies from the Middle East

World oil prices are falling on Thursday, October 15, after three days of growth. Investors are reassessing the risks of supply disruptions from the Middle East, while the International Energy Agency (IEA) has worsened its forecast for global oil demand due to the consequences of the war with Iran.

According to Bloomberg, during morning trading, December Brent futures fell by 1.8% to $104.15 per barrel. American West Texas Intermediate (WTI) crude for November delivery lost 1.3% and traded at $93.83 per barrel.

The decline occurred after Brent had risen by 1.3% over the first three trading sessions of the week. At that time, prices were supported by fears of new oil supply disruptions due to attacks on Saudi Arabia's energy infrastructure and shipping in the Strait of Hormuz.

Now the market is partially reassessing these risks, as Houthi attacks have not yet caused major disruptions in Saudi oil supplies. However, it is not known for certain whether the latest strikes have affected exports of the world's largest crude oil supplier.

Itochu Research Institute senior economist Takahiro Asaoka noted that the absence of the serious disruptions that traders feared helps reduce the geopolitical premium in oil prices.

An additional factor was the IEA report released on October 14. The agency forecasts that global oil consumption in 2026 will decrease by 2.6 million barrels per day. This is 100 thousand barrels more than the previous estimate of demand decline.

According to IEA calculations, average annual oil consumption will be 102.4 million barrels per day. The reasons for the decline remain high fuel prices, limited availability of petroleum products and worsening economic prospects amid the war with Iran. The agency expects a resumption of demand growth on an annual basis only from March 2027.

At the same time, the situation with crude oil supplies is gradually improving. In September, global production increased by 2.5 million barrels per day to 102.3 million barrels. The main contribution was made by the Gulf countries, primarily Saudi Arabia and the United Arab Emirates.

Crude oil exports from the region increased to 13.9 million barrels per day, exceeding 75% of the pre-war level. However, supplies of refined petroleum products are recovering much more slowly and remain below half of the volumes before the war.

Despite the current oil price decline, the IEA warns of a persistent global market deficit until the end of the year. The situation with diesel fuel remains particularly tense, as its inventories are declining ahead of the winter season.

According to the agency's assessment, a return to a normal balance in the diesel market will depend on the recovery of refinery operations and supplies from the Middle East. New attacks on oil infrastructure or tankers could push prices up again.

Based on materials from: Bloomberg, International Energy Agency (IEA)