On October 16, the IEA monthly report stated that Gulf oil-producing countries led by Saudi Arabia saw their crude oil exports surge by 4.4 million barrels per day in September, reaching 13.9 million barrels per day, exceeding 75% of pre-war levels, indicating a strong recovery in supply.

This change was not explicitly mentioned in the monthly report released by OPEC. With both the Strait of Hormuz and the Bab-el-Mandeb Strait under blockade, the Middle East's oil exports being able to recover to around 75% of pre-war levels mainly relies on frequent ship-to-ship transfers in the Gulf of Oman. The rapid recovery of Saudi Arabia's East-West pipeline transportation increased total bypass export volumes by 970,000 barrels per day, reaching 5.6 million barrels per day.

The IEA monthly report mentioned that global oil supply is expected to average 101.4 million barrels per day in the second half of this year, higher than the 96.4 million barrels per day in the second quarter of 2026. The IEA is managed by the OECD organization and naturally tends to be bearish on the crude oil market, which is exactly opposite to OPEC's stance.

Regarding global supply of crude oil in the second half of the year, the IEA's projection of 101.4 million barrels per day may be overly optimistic. In particular, the sustainability of ship-to-ship transfer methods and the destruction of the East-West oil pipeline by Yemen's Houthi armed forces may both turn out to be more pessimistic than the IEA's forecasts. According to the latest news, the Houthi armed forces launched 6 ballistic missiles at the presidential palace in Aden, Yemen's temporary southern capital, causing casualties.

The conflict between Yemen and Saudi Arabia has not yet ceased, and internal problems within Yemen are beginning to emerge. The Strait of Hormuz remains under blockade, and the blockade of the Bab-el-Mandeb Strait may intensify. The supply side of the international energy market remains tight, and raising global crude oil supply to 101.4 million barrels per day will be quite difficult.

The IEA monthly report mentioned that in mid-September, Singapore's diesel wholesale price exceeded $200 per barrel and reached historical highs of approximately $220 per barrel in Europe and the United States. The Singapore diesel wholesale price mentioned by the IEA is relatively novel and can serve as an important reference for observing current changes in global refined oil supply and demand.

Both the United States and Europe face problems of insufficient diesel supply and prices rising to phased highs. Due to insufficient refining capacity, even if crude oil supply recovers in the fourth quarter, it cannot quickly resolve the diesel shortage problem. According to statements from Russian representatives, Russia and the United States are expected to sign the first batch of contracts to supply diesel to the United States in the coming days.

It should be noted that the United States is a net exporter of crude oil and is currently imposing multiple sanctions on Russia. Now that it is about to sign diesel contracts with Russia, it is evident that its diesel shortage problem is extremely prominent. If this situation continues, it may lead to the United States changing its policies toward Iran and Russia.

Figure 1, U.S. crude oil daily chart - ATFX During the period when the United States and Iran signed a peace agreement, U.S. crude oil once fell to around $67. After the agreement broke down, U.S. crude oil rose rapidly and touched a phased high of $102 in September. Today's latest price is $95.67. Although it has pulled back somewhat, it remains at a relatively high level.

The bearish factors mentioned in the IEA monthly report, such as increased supply in the fourth quarter, have not formed a significant impact on U.S. crude oil prices. At present, it appears that Russia's oil exports and the Middle East's oil export problems are very likely to evolve into long-term supply reductions, and improvement in the fourth quarter will be difficult. They may even worsen due to Iran's countermeasures and Ukraine's attacks on Russian refineries.

Unless the United States' attitude toward Iran and Russia undergoes a major shift, the potential decline in U.S. crude oil in the fourth quarter may be very limited.

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