Crude oil and gasoline futures closed lower on Friday as a stronger US dollar and expectations of a global oil surplus outweighed continuing concerns about supply disruptions in the Middle East. December WTI crude oil (CLZ26) settled 0.18 lower at the end of the session, a decline of 0.20%, while December RBOB gasoline (RBZ26) fell 0.0494, or 1.85%.
The US dollar index climbed to a 1.5-year high, putting additional pressure on dollar-denominated energy commodities. The International Energy Agency (IEA) also reduced its 2026 global oil demand forecast and projected a substantial supply surplus for the current quarter.
However, losses in crude were limited by continued geopolitical uncertainty. The US-Iran conflict remains a significant supply risk, with attacks on commercial shipping and energy infrastructure keeping traders alert to the possibility of further disruption across key Middle Eastern export routes.
Crude Oil and Gasoline Market Snapshot
| Market Indicator | Latest Reading |
|---|---|
| December WTI crude oil (CLZ26) | Down $0.18 (-0.20%) |
| December RBOB gasoline (RBZ26) | Down $0.0494 (-1.85%) |
| US dollar index | 1.5-year high |
| IEA 2026 global oil demand forecast | 102.29 million bpd |
| IEA demand forecast revision | -90,000 bpd |
| IEA projected global surplus this quarter | 2 million bpd |
| Saudi October crude production | 9.2 million bpd |
| OPEC October crude production | 22.8 million bpd |
| US crude oil production | Record 14.013 million bpd |
| US crude inventories versus five-year average | -4.4% |
| US gasoline inventories versus five-year average | +0.5% |
| US distillate inventories versus five-year average | -8.4% |
| Active US oil rigs | 463 |
Current Price Action: Dollar Strength and Surplus Concerns Weigh on Energy
Crude oil and gasoline prices retreated on Friday as the stronger dollar reduced the appeal of dollar-denominated commodities. The dollar index reached its highest level in 1.5 years, adding to selling pressure across the energy complex.
The IEA’s latest assessment provided another bearish influence. The agency reduced its 2026 global oil demand forecast to 102.29 million barrels per day, a downward revision of 90,000 bpd from its previous estimate.
At the same time, the IEA increased its global oil supply estimate for 2026 by 920,000 bpd and projected that the market would move into a surplus of 2 million bpd this quarter. This would mark the first global surplus since the beginning of the Iran war.
The combination of weaker demand expectations and rising supply projections has increased concerns that the market could become more comfortably supplied, limiting the scope for sustained price gains.
IEA Outlook: Global Oil Surplus Raises Bearish Risks
The IEA’s latest projections have become a major focus for energy traders.
The agency’s revised demand estimate of 102.29 million bpd reflects a reduction of 90,000 bpd from the previous month’s forecast. Meanwhile, its upward revision to global oil supply estimates of 920,000 bpd points towards a less constrained market.
The projected surplus of 2 million bpd this quarter is particularly significant because it suggests that supply could exceed consumption despite ongoing geopolitical disruptions.
If the IEA’s outlook is reflected in physical market balances, crude prices could face additional pressure as traders reassess the risk of excess inventories and weaker competition for available barrels.
Middle East Conflict: Geopolitical Risks Limit Crude Oil Losses
Despite the bearish demand and supply outlook, geopolitical risks continued to provide support for crude oil.
President Trump said the United States does not need a deal with Iran, reducing expectations of an immediate diplomatic breakthrough that could help resolve the conflict and restore confidence in regional energy supply routes.
Tensions remained elevated after US Central Command reported that it had shot down two attack drones launched by Iran’s Islamic Revolutionary Guard Corps towards a US base in Bahrain.
The security situation across the Persian Gulf, Strait of Hormuz and Gulf of Oman remains a concern for energy markets. Consultant Verisk Maplecroft reported 36 confirmed attacks on commercial ships across these areas in October, the highest monthly total since the Iran war began.
Continued attacks on shipping and energy infrastructure create the possibility of further supply disruption, even as current export flows indicate that substantial volumes of oil are still leaving the region.
Middle East Exports: Regional Shipments Remain Resilient
Despite the ongoing conflict, combined crude oil exports from Saudi Arabia, the United Arab Emirates, Iraq and Kuwait increased by 10% in October to 15.53 million bpd.
Tanker-tracking data compiled by Bloomberg indicated that regional shipments were roughly in line with levels recorded at the start of the year.
This is an important consideration for traders because it suggests that, despite the security risks, the conflict has not eliminated the flow of crude from major regional exporters.
The market will continue to assess whether these export volumes can be maintained if attacks on commercial shipping or energy infrastructure intensify.
Saudi Arabia: Higher Production Adds to Global Supply
Saudi Arabia’s increased production has provided another bearish influence.
The kingdom reported that October crude oil output rose by 970,000 bpd to 9.2 million bpd, an increase of 12% month-on-month. Production has therefore recovered further from the 36-year low recorded in August.
Higher Saudi output adds to global supply availability at a time when the IEA is already forecasting a substantial market surplus.
However, Saudi production and exports remain exposed to regional security risks, including Houthi missile attacks and threats to shipping near the Bab al-Mandeb Strait.
A separate supportive factor came from Saudi Aramco’s pricing decision. The state producer reduced its December-delivery crude price for Asian buyers by $2 per barrel, a smaller reduction than the $5 expected by the market. The smaller-than-anticipated adjustment may indicate firmer pricing conditions than some buyers had expected.
Russia: Ukrainian Attacks Disrupt Refining and Crude Processing
Russian oil infrastructure remains another important source of supply uncertainty.
Ukraine has attacked nine Russian oil refineries since the beginning of November, including the Omsk facility, Russia’s largest refinery.
According to Rystad Energy AS, Russian refinery runs during the first ten days of November averaged 4.2 million bpd, down from 5 million bpd in late October.
Russian crude-processing rates had already averaged 3.51 million bpd in July, their lowest level in 24 years, amid damage to the country’s energy infrastructure from Ukrainian drone and missile attacks.
Disruptions to Russian refining and processing could influence the availability of refined products and crude flows, although the immediate effect on global supply will depend on the extent and duration of the damage.
OPEC+ Production: Output Increases and Quota Decisions
OPEC+ agreed on November 1 to keep oil production quotas unchanged for December.
The group had previously approved a final production increase of 188,000 bpd for September, following its decision to restore the 1.65 million bpd of supply reductions introduced in 2023. OPEC+ had also indicated that it intended to keep output steady for the remainder of the year after the September increase.
However, the ability of producers to deliver planned increases could be affected by continuing Middle East shipping disruptions.
OPEC crude production increased by 930,000 bpd in October to 22.8 million bpd, its highest level in eight months. The rise adds to the broader supply picture that has prompted the IEA to forecast a global surplus.
Oil Inventories: US Crude Stocks Below Seasonal Average
The latest US Energy Information Administration (EIA) figures presented a mixed picture for petroleum inventories.
As of November 6:
- US crude oil inventories were 4.4% below their five-year seasonal average.
- Gasoline inventories were 0.5% above their five-year seasonal average.
- Distillate inventories were 8.4% below their five-year seasonal average.
The below-average crude and distillate inventory levels provide some support to the market, particularly if demand strengthens or supply disruptions intensify.
However, gasoline inventories sitting slightly above their seasonal average offer less evidence of immediate product-market tightness.
US crude production also increased by 0.1% week-on-week to a record 14.013 million bpd, reinforcing concerns about the strength of domestic supply.
Tanker Storage: Floating Crude Inventories Decline
Vortexa reported that crude oil stored on tankers stationary for at least seven days fell by 7.7% week-on-week to 88.32 million barrels in the week ended November 6.
This was the lowest level in more than three months.
The decline suggests that floating crude inventories have eased, providing a counterpoint to the wider concerns about a potential global surplus. Traders will monitor whether this reduction continues and whether it reflects stronger movement of oil into consuming markets.
US Oil Drilling Activity: Rig Count Holds at 1.5-Year High
Baker Hughes reported that the number of active US oil drilling rigs remained unchanged at 463 in the week ended November 13.
The figure represents a 1.5-year high, indicating that drilling activity remains elevated.
Combined with record US crude production, the rig count reinforces the importance of monitoring domestic supply growth as the market assesses the IEA’s surplus projections.
Bullish Sentiment
- Middle East supply disruption risks: Continued attacks on commercial shipping and energy infrastructure across the Persian Gulf, Strait of Hormuz and Gulf of Oman create the possibility of further supply interruptions.
- US-Iran tensions remain elevated: The latest drone incident involving a US base in Bahrain and the absence of an immediate diplomatic breakthrough keep geopolitical uncertainty in focus.
- Below-average US crude inventories: Crude stocks were 4.4% below their five-year seasonal average as of November 6.
- Tight distillate inventories: US distillate inventories were 8.4% below their five-year seasonal average, providing a supportive signal for refined-product markets.
- Lower floating crude inventories: Tanker-stored crude fell 7.7% week-on-week to 88.32 million barrels, its lowest level in more than three months.
- Russian refinery disruption: Ukrainian attacks have reduced Russian refinery runs, creating uncertainty around regional crude processing and refined-product availability.
- Aramco pricing decision: The $2-per-barrel reduction in December Asian crude prices was smaller than the market’s expected $5 reduction.
Bearish Sentiment
- IEA surplus forecast: The agency projected a global oil surplus of 2 million bpd this quarter, increasing concerns about excess supply.
- Lower demand expectations: The IEA reduced its 2026 global oil demand forecast by 90,000 bpd to 102.29 million bpd.
- Higher global supply estimate: The IEA increased its 2026 global oil supply estimate by 920,000 bpd.
- Stronger US dollar: The dollar index reached a 1.5-year high, weighing on dollar-denominated crude oil and gasoline prices.
- Higher Saudi production: Saudi crude output increased by 970,000 bpd in October to 9.2 million bpd, adding to global supply.
- Higher OPEC production: OPEC output rose by 930,000 bpd to an eight-month high of 22.8 million bpd in October.
- Record US crude production: US output reached a record 14.013 million bpd, reinforcing concerns about domestic supply growth.
- Elevated US drilling activity: The active oil rig count remained at 463, a 1.5-year high.
Crude Oil and Gasoline Price Forecast: What Traders Are Watching
The near-term outlook for crude oil remains caught between two opposing forces: expectations of a global supply surplus and the continuing risk of geopolitical disruption.
The IEA’s projected surplus of 2 million bpd this quarter represents a significant bearish consideration. Higher Saudi and OPEC production, record US output and weaker demand expectations could create additional downward pressure if these supply trends continue.
However, the market remains sensitive to developments involving Iran, commercial shipping and regional energy infrastructure. Any escalation that materially affects exports through the Strait of Hormuz or other key routes could quickly reverse bearish sentiment.
For gasoline, traders will also monitor US inventory levels and the implications of the latest crude market developments for refined-product supply. Friday’s 1.85% decline in December RBOB gasoline was considerably larger than the fall in WTI crude.
The strength of the US dollar, upcoming inventory figures, OPEC+ production developments and the direction of Middle East tensions will remain important drivers of short-term price movements.
Supply Outlook
Global oil supply expectations have become increasingly bearish following the IEA’s upward revision to its 2026 supply forecast.
Saudi Arabia’s production recovery, higher OPEC output and record US crude production all point towards a substantial supply base. The projected surplus could become more influential if Middle East exports remain resilient and production increases are delivered as expected.
Nevertheless, the outlook is not without risks. Shipping attacks, regional infrastructure threats and disruptions to Russian refining operations could affect the availability and movement of crude and petroleum products.
The market will therefore remain highly sensitive to the balance between rising production and geopolitical supply constraints.
Demand Outlook
The IEA’s reduction in its 2026 demand forecast indicates a less supportive consumption outlook than previously anticipated.
The revised estimate of 102.29 million bpd, down 90,000 bpd from the previous forecast, reinforces concerns that demand may not absorb the expected increase in global supply.
The strength of the US dollar also presents a potential headwind for commodity demand by increasing the cost of dollar-denominated purchases for buyers using other currencies.
The next major focus will be whether actual consumption and inventory movements support the IEA’s projected surplus or reveal tighter conditions than expected.
Market Outlook for the Coming Sessions
Crude oil and gasoline enter the coming sessions under pressure after Friday’s declines, with the stronger dollar and the IEA’s global surplus forecast weighing on sentiment.
The broader fundamental picture is increasingly challenging for crude bulls, given higher Saudi and OPEC production, record US output and the prospect of a 2 million bpd surplus this quarter.
However, geopolitical risks remain substantial. Continued attacks on commercial shipping, tensions between the United States and Iran and disruption to Russian energy infrastructure could limit further losses or trigger renewed volatility.
For crude oil, the central question is whether growing global supply will outweigh the risk of Middle East disruption. For gasoline, traders will be watching product inventories and the extent to which weakness in crude prices feeds through to refined-product markets.
Until clearer evidence emerges, energy prices are likely to remain sensitive to dollar movements, inventory data, production decisions and geopolitical developments.
Currency Hedger – Market Contributor
Currency Hedger provides international payments, foreign exchange and currency risk management solutions for businesses operating across global markets.
Disclaimer: This article is provided for informational and educational purposes only. It does not constitute investment advice, financial advice or a recommendation to buy or sell any financial instrument. Crude oil, gasoline and other commodity markets involve substantial risk, and prices can be highly volatile. Traders should conduct their own research and consider their financial circumstances before making investment decisions.
