High Oil Prices Suppress Demand as Global Oil Market Returns to Oversupply
nashnova research
JPMorgan and Goldman Sachs report the global oil market has swung back into a 1.1–1.4 million barrel-per-day surplus since September, with high prices already destroying roughly 3.3 mb/d of cumulative demand — the rally is eating itself.
How big is the surplus?
JPMorgan estimates the global market was oversupplied by 1.1 mb/d in September, widening to 1.4 mb/d in October — roughly in line with last year's average surplus of 1.3 mb/d.
This means → despite the Iran war tightening supply earlier this year, the market has drifted back to pre-war looseness.
Since the war began, global oil consumption has fallen a cumulative 3.3 mb/d, with September alone down 4.1 mb/d. In plain terms = high prices forced users worldwide to cut back so sharply that the demand destruction now exceeds the barrels the war took offline.
Do JPMorgan and Goldman agree?
JPMorgan calls it outright oversupply. Goldman is more cautious: inventories stopped falling in September–October, leaving the market in balance, not clear surplus.
Goldman attributes the current picture to three overlapping forces: a mild surplus base from last year + rising output outside the Gulf + demand erosion from high prices.
This means → the two banks disagree on degree, not direction — both see supply recovering and demand weakening.
How much Middle East supply is back?
Vortexa ship-tracking data shows Gulf crude and condensate exports averaged 14 mb/d in October — about 86% of pre-war levels.
Refined-product exports, however, averaged only 3.1 mb/d — barely above half of normal. In plain terms = the crude pipelines are mostly flowing again, but refineries have not fully recovered — the wellhead-to-pump chain is healing unevenly.
By country, Saudi Arabia has held relatively steady, while the UAE, Kuwait, and Qatar have seen weaker flows. Both tracking firms say October figures could be revised upward as more shipping details emerge.
What is the futures market signalling?
This week's Brent crude swap contract traded below next week's, with the discount at its widest since July. The second- and third-week contracts also sit below next week's, forming a Contango structure — near-term prices lower than later ones.
This means → Contango signals that there is too much oil right now — sellers accept a discount to offload; buyers see no rush to take delivery. It is the derivatives market echoing the physical-market surplus.
Yet from the January 2027 delivery onward, Brent futures remain in Backwardation — near-month prices above far-month — indicating the market still expects tighter supply in the medium term.
Could the near-term structure spread?
Veteran oil trader Adi Imsirovic notes that if swaps stay in Contango, Brent futures could follow suit.
This reflects a well-known pattern: shifts in the term structure typically start in the spot market and ripple outward into futures.
In plain terms = the front end (weeks-out delivery) is already in "too much oil, prices sag" mode. If that persists, the back end (months-out delivery) will get dragged down too — and the market's confidence in a tighter medium-term outlook may erode.
市场有风险，内容仅供研究参考，不构成投资建议。