By Elena Vasquez

Iraq produced 4.6 million barrels of crude a day in October, its highest level in seven years, according to the International Energy Agency’s monthly oil market report released on Friday. The 540,000-barrel-a-day increase from September added about 16.2 million barrels to a 30-day production total.

Iraq’s October output ran 170,000 barrels a day above its implied target of 4.43 million barrels, the IEA said. The agency estimated sustainable capacity at 4.87 million barrels a day, leaving a 270,000-barrel-a-day gap between October output and that capacity estimate.

On a 30-day basis, October production equaled 138 million barrels, approximately 5.1 million barrels above the implied target.

How far has the Gulf recovered?

Gulf producers excluding Oman exported 18.4 million barrels a day in October, still 26% below pre-war levels, the IEA said. Bloomberg put that pace at the highest since September 2019 and reported a month-on-month increase of 950,000 barrels a day.

The 950,000-barrel-a-day rise amounted to 28.5 million barrels over 30 days. It exceeded Iraq’s 540,000-barrel-a-day production gain by 410,000 barrels a day.

Some producers sent cargoes on low-profile tanker runs across the Strait of Hormuz, the IEA said. Others used alternative export routes that never touched the waterway, allowing shipments to continue as attacks on tankers and energy infrastructure continued.

How much did global supply change?

Global oil supply rose 2.3 million barrels a day to 105.4 million in October, the IEA said, following a 3 million-barrel-a-day increase in September. On a 30-day basis, the two increases added 69 million and 90 million barrels, respectively.

Saudi Arabia supplied 9.99 million barrels a day, up from 8.93 million in September. Kuwait produced 2.03 million barrels a day, compared with 1.58 million a month earlier, the IEA said.

Saudi Arabia’s 1.06 million-barrel-a-day increase accounted for about 46% of October’s global gain, based on the IEA’s figures. Kuwait added 450,000 barrels a day.

How do IEA and OPEC estimates compare?

Iraq told OPEC it produced 4.888 million barrels a day in October, 288,000 barrels above the IEA’s 4.6 million estimate. The higher submission would place output 18,000 barrels a day above the IEA’s estimated sustainable capacity.

Saudi Arabia told OPEC it pumped 10.563 million barrels a day, 573,000 barrels above the IEA’s 9.99 million estimate. The two reporting systems therefore differ by 288,000 barrels a day for Iraq and 573,000 for Saudi Arabia.

Those discrepancies equated to about 8.6 million barrels over 30 days for Iraq and 17.2 million for Saudi Arabia, leaving a material gap between estimated production and producer submissions.

What does the war-related disruption still mean?

The recovery followed disruption from the U.S.-Israeli war on Iran, which began in late February. Despite continuing attacks on energy infrastructure and tankers, the IEA attributed the supply increases to high Gulf exports.

The regional export shortfall remained substantial: an 18.4 million-barrel-a-day October rate was about 6.5 million barrels a day below the pre-war pace implied by the IEA’s 26% deficit estimate. Iraq had regained output beyond its target, but the Gulf had not restored pre-war shipping.

October narrowed the disruption without restoring the prior supply picture: Gulf exports remained 26% below pre-war levels, and producer submissions continued to exceed IEA estimates.