Global oil market balances are looking increasingly lopsided, as world oil supply is forging ahead while oil demand growth remains modest by historical standards. At the same time, the risks to the forecast remain plentiful, with the economic repercussions of the recent tariff turmoil and the US federal government shutdown still uncertain, and the impacts of new sanctions on Russia yet to become clear. North Sea Dated crude oil prices slumped by $3.26/bbl in October, their fourth consecutive monthly decline, to average $64.64/bbl, and were trading at around $62/bbl at the time of writing.
The relentless rise in global oil supply briefly reversed course in October, falling by 440 kb/d m-o-m to 108.2 mb/d, as a raft of planned field maintenance and unscheduled outages curbed output. Nevertheless, total output was a massive 6.2 mb/d above January, albeit the low point for the year due to seasonal weather related shut-ins. World oil supply is now projected to rise by 3.1 mb/d in 2025 to an annual average of 106.3 mb/d – and by another 2.5 mb/d in 2026 to 108.7 mb/d. In a shift from the recent past, this year’s increase is almost evenly divided between non-OPEC+ and OPEC+ producers. Saudi Arabia boosted supply by close to 1.5 mb/d from January through October, in line with its higher quota. By contrast, Russian production is up by only 120 kb/d over the same period, with growth stymied by sanctions and a challenging operating environment.
Russia’s oil industry has come under more severe pressure after the United States and the United Kingdom sanctioned the two largest Russian producers Rosneft and Lukoil, which together produce and internationally market about half of the country’s crude. The latest sanctions come into effect on 21 November, but so far Russian exports have continued largely unabated, even as volumes have piled up on water as buyers evaluate compliance risks and possible workarounds.
Indeed, following an 80 mb increase in oil on water in September, preliminary October data indicate a further 92 mb build, mostly of crude. Sanctioned barrels account for around 32% of the 194 mb rise in crude on water over the past two months. Surging long-haul shipments from producers in the Americas to markets East of Suez and the sharp rise in Middle East loadings also add to the flotilla of stocks. By contrast, stocks on land, with the exception of Chinese crude oil and US gas liquids, remain low across key pricing hubs. Middle distillate markets appear particularly tight with limited potential for relief. Depleted product stocks and a spate of unscheduled refinery outages lifted European and Asian refining margins to two-year highs, while US Mid-continent margins doubled in a matter of days following a refinery outage.
Worldwide oil demand growth was revised higher by 170 kb/d in 3Q25 to 920 kb/d y-o-y, largely due to stronger deliveries in China. This contributed to minor upward revisions to our 2025 and 2026 growth forecasts, which are still below 800 kb/d for both years. Petrochemical feedstocks remain the bedrock of global gains, but so far this year the sector has significantly underperformed expectations. In 4Q25, global oil consumption growth is expected to ease relative to 3Q25 while crude supply is on course to rebound further, adding to market balances that look increasingly askew.
