JPMorgan has estimated that the petroleum market has returned to surplus, just as HSBC raised its production forecasts for Saudi Aramco.
Their outlook follows gradual recovery of oil supplies from months of disruptions associated with the Middle East conflict.
In separate assessments released Wednesday, November 4, the banks pointed to recovering regional exports, increased production outside the Middle East, and weaker global consumption as evidence that physical supply conditions are improving.
JPMorgan estimates the global oil market recorded a surplus of 1.1 million barrels per day in September, expanding to 1.4 million barrels per day in October. That compares with an average surplus of approximately 1.3 million barrels per day during 2025.
The bank said international trade flows and inventories indicate that additional crude supplies are returning to the market.
Global crude imports reached approximately 44.9 million barrels per day in October, an increase of 1.3 million barrels per day from a year earlier.
Middle Eastern petroleum exports have recovered to approximately 20.7 million barrels per day from a low of 9.8 million barrels per day in March, although shipments remain below levels recorded before the conflict began in late February.
Additional production from outside the region is contributing to the improving supply balance.
JPMorgan estimates Latin American crude production has increased approximately 1.5 million barrels per day from a year earlier, supported by higher output from Brazil, Venezuela, Guyana, and Argentina.
At the same time, elevated fuel prices and supply disruptions have weakened petroleum consumption.
The bank estimates global oil demand has declined approximately 3.3 million barrels per day since the conflict began, contributing to the market’s return to surplus.
HSBC also revised its expectations for Saudi Aramco, reflecting faster recovery in Saudi crude exports.
The bank increased its fourth-quarter 2026 Aramco production forecast to 8.3 million barrels per day from 6.3 million previously.
For 2027, HSBC raised its production estimate to 9.8 million barrels per day from 8.8 million and expects output to return to approximately 10 million barrels per day by midyear.
Saudi crude exports recovered to approximately seven million barrels per day in October, approaching pre-conflict levels, according to HSBC.
The improved outlook comes as diplomatic discussions involving Iran have reduced some of the geopolitical premium embedded in international crude prices.
However, recovering exports do not eliminate the risks associated with damaged infrastructure, shipping restrictions, and potential renewed hostilities.
For energy investors, the emerging surplus could limit further crude price increases and influence upstream capital allocation, particularly among producers evaluating drilling activity and acquisition opportunities.
Refiners and petroleum consumers could benefit from improved crude availability, although product inventories and transportation costs remain important considerations.
The latest assessments suggest that the direction of oil prices will increasingly depend on whether recovering supplies outpace demand, rather than geopolitical developments alone
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