Global oil markets

Global oil prices
The Brent crude oil spot price increased to an average of $124 per barrel (b) in October, $10/b higher than in September and the highest price since July 2022 when prices averaged $127/b adjusted for inflation. Prices increased for a third consecutive month as global oil inventories continued to fall. Attacks on oil tankers continued around the Middle East and, more recently, in the Black Sea, stemming from the conflict between Russia and Ukraine. These attacks further disrupted global oil flows and reduced the availability of global oil tankers, causing tanker rates to rise sharply.

Although oil prices increased last month, ship tracking data from Vortexa indicate that oil exports from the Middle East increased slightly in October, following the restart of the Saudi Arabian East-West Pipeline. Continued flows through the Strait of Hormuz using ship-to-ship transfers along Oman’s coast added to supply, which was reflected in prices during late October and early November, with the Brent spot price falling below $100/b on November 4.

Crude oil production shut-ins fell in October compared with September. We assess that crude oil production shut-ins in the Middle East averaged 2.5 million barrels per day (b/d) in October, down from 10.9 million b/d at the peak in May. Shut-in volumes in our forecast remain essentially flat through the remainder of 2026, as we assume oil flows from the Middle East remain somewhat constrained during this period. Amid ongoing constraints, we forecast Brent will average around $100/b during November and December.

We estimate that global oil inventories fell by an average of 1.2 million b/d in the third quarter of 2026 (3Q26) but will begin building in 4Q26. Although we forecast that global oil production will outpace consumption in 4Q26, the heightened risk of supply disruptions and longer shipping routes will limit the near-term impact of global stock builds until geopolitical risk dissipates and inventories begin to return closer to pre-conflict levels.

We assume export workarounds from the Middle East such as pipeline and overland bypass routes, ship-to-ship transfers, and new pipeline capacity expected to come online in 2027 in the United Arab Emirates will lead to shut-in volumes gradually falling through the Short-Term Energy Outlook forecast period. Global inventories in our forecast build by 3.5 million b/d in the first half of 2027, pushing the Brent price below $90/b in 2Q27. We expect the majority of production in the Middle East, outside of Iran, to return to pre-conflict averages by the end of 2Q27. We expect exports from Iran, however, to remain constrained through the forecast period. As depleted global oil inventories build throughout next year, oil prices gradually fall to an average of $77/b in 4Q27. However, we expect crude oil flows from the Middle East—via both the Strait of Hormuz and alternative routes—will remain susceptible to disruption, resulting in more volatility in short-term price movements than our monthly forecast indicates.

Oil demand has fallen considerably during the prolonged oil supply disruption. The reduction in oil consumption, particularly in China, has limited the impact that the loss of supply has had on global oil prices. We now estimate that global liquid fuels consumption will fall by 2.0 million b/d in 2026. In addition to lower consumption in China, we estimate oil consumption in the Middle East has fallen largely because of reduced air travel and less economic activity. We anticipate that global oil demand will recover in 2027, increasing by 2.0 million b/d on average, as the gradual increase in oil flows and falling prices encourage increased demand.