6th November 2026
There is something rather puzzling happening in the international oil market. Despite growing evidence that the world is producing more oil than it consumes, prices have been rising again, with Brent crude briefly moving above $100 a barrel on Friday, 6 November.
It raises an obvious question. If there is more oil available than the world needs, why are consumers still facing the prospect of higher petrol, diesel and heating oil prices?
The answer is that the oil market is considerably more complicated than simply comparing how many barrels are produced with how many are consumed. Where oil is produced, whether it can be transported safely, what type of oil is available and whether refineries can turn it into usable fuel all matter.
And, increasingly, international politics and military conflict are influencing prices just as much as supply and demand.
The surprising return of an oil surplus
According to estimates from JPMorgan, the global oil market moved back into surplus during September, with supply exceeding consumption by approximately 1.1 million barrels a day. The surplus widened to around 1.4 million barrels a day in October.
Goldman Sachs has also reported signs that global oil inventories stopped declining during those months.
This is significant because the war involving Iran had previously disrupted supplies and caused considerable withdrawals from international oil stocks.
As shipments recovered and producers elsewhere increased output, the balance between production and consumption began to improve.
However, this does not mean that every country has easy access to the oil it needs, or that prices must immediately fall.
The Strait of Hormuz remains a major problem
One of the biggest uncertainties remains the Strait of Hormuz, through which a substantial proportion of internationally traded oil normally passes.
The waterway connects the Persian Gulf with international shipping routes and is particularly important to exports from Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran.
The continuing conflict has made shipping through the region more dangerous and expensive.
On Thursday, 5 November, Brent crude rose by 3.9% to settle at $98.29 a barrel, following reports of further incidents involving tankers in the Gulf.
By Friday morning, prices had risen further, with Brent briefly moving above $100.
The market had initially reacted positively to the American midterm election results, anticipating that political pressure might encourage President Trump to seek an agreement with Iran.
But hopes of a rapid diplomatic settlement have proved premature.
At least five vessel incidents had been reported since Sunday, according to the UK Maritime Trade Operations organisation. Shipping companies must consider not only the cost of the oil but also insurance, security, delays and the possibility of vessels being damaged.
Consequently, even when oil is available, getting it safely to its destination can become a much more expensive operation.
Crude oil is not the same as diesel
There is another important distinction which is often overlooked.
Crude oil is the raw material. It must be processed in refineries to produce petrol, diesel, aviation fuel, heating oil and other petroleum products.
The global market may have sufficient crude oil, but that does not automatically mean there is enough diesel or other refined fuel in the right locations.
The latest figures illustrate the problem.
JPMorgan estimated that Gulf crude and condensate exports recovered to around 14 million barrels a day in October, approximately 86% of their pre-war level.
However, exports of refined petroleum products were still only a little over half their normal level.
This is an important difference.
Damage to refineries, disruption to shipping and restrictions on exports can leave particular fuel markets tight even when the overall crude oil market is moving towards surplus.
For countries heavily dependent on imported diesel, this can be particularly uncomfortable.
Russia and Ukraine add another complication
The continuing attacks on energy infrastructure in Russia and Ukraine introduce another source of uncertainty.
Ukraine has renewed attacks on Russian oil refineries, including facilities at Yaroslavl and Ryazan.
Russia can continue exporting crude oil even when its refineries are damaged, but reduced refining capacity can affect the availability of diesel and other petroleum products.
Russia is an important supplier in international energy markets, so any sustained disruption has consequences beyond the immediate conflict.
Meanwhile, Russia's attacks on Ukrainian electricity infrastructure threaten the country's ability to maintain industrial production and essential services as winter approaches.
The two conflicts are different, but together they demonstrate how vulnerable energy supplies can become when production facilities, refineries and transport networks are deliberately targeted.
Why prices can rise even when there is a surplus
There are several reasons why the oil price does not always follow the apparent balance between supply and demand.
1. Location matters. Oil sitting in storage in one country cannot necessarily replace supplies that have become unavailable somewhere else.
2. Timing matters. A surplus expected in several months does not necessarily solve a shortage today.
3. Refining capacity matters. Having sufficient crude oil does not guarantee adequate supplies of diesel, petrol or aviation fuel.
4. Shipping security matters. Tanker attacks, insurance costs and restricted shipping routes can make available supplies considerably more expensive.
5. Financial markets matter. Oil is traded internationally through futures contracts. Investors buy and sell based on expectations about future supply, demand and political developments. Prices can therefore move sharply before any physical shortage actually occurs.
These factors help explain why oil prices can rise even when production appears sufficient to meet global consumption.
What does this mean for Britain?
Britain is not directly dependent on Russian oil in the way it once was, but it cannot isolate itself from international oil prices.
The UK buys crude oil and refined products from different sources, including domestic North Sea production. However, the prices of these products are influenced by international markets.
For Scotland, the consequences can be particularly noticeable in rural areas.
Many households in Caithness and Sutherland depend on heating oil rather than mains gas. Farmers, hauliers, construction companies and other businesses also rely heavily on diesel.
A rise in international crude prices can eventually feed through to these customers, although the relationship is not immediate or one-for-one.
The pound-dollar exchange rate, refinery margins, distribution costs and local competition also influence what consumers actually pay.
There is another concern. If diesel becomes significantly more expensive, the consequences spread well beyond filling stations. Transport costs increase, food distribution becomes more expensive and businesses face pressure on their operating costs.
For households already struggling with the cost of living, another period of fuel price volatility would be unwelcome.
Is the worst over?
It is tempting to assume that a global oil surplus will eventually bring prices down, and there are reasons to expect that additional supplies could ease pressure on the market.
But the surplus does not remove the geopolitical risks.
If diplomatic efforts succeed and shipping through the Strait of Hormuz returns to normal, the market could become considerably more comfortable.
If the conflict escalates, further attacks on tankers or energy infrastructure could quickly reverse that improvement.
Analysts have warned that a renewed escalation could push Brent towards $110–$125 a barrel, although this is a risk scenario rather than a forecast.
The latest price movements demonstrate just how quickly sentiment can change. On Wednesday, oil prices fell by more than 8%. On Thursday, they rebounded by almost 4%.
That is a remarkable amount of volatility in just two trading sessions.
The bigger lesson about energy security
The current situation exposes a weakness in the way energy security is sometimes discussed.
Governments can talk about the total amount of oil available in the world, but that does not guarantee that the right fuel will reach the right place at an affordable price.
Energy security depends on production, refining, storage, shipping, distribution and the resilience of infrastructure.
It also depends on international stability.
Britain is investing heavily in renewable electricity, new grid connections and energy-intensive industries such as data centres. Those developments may help reduce dependence on imported fossil fuels over time, but the transition itself will require reliable energy supplies and substantial investment.
For rural Scotland, where alternatives to heating oil and road transport remain limited, these international developments are not remote events.
The oil market is sending a clear message: having enough oil in the world is not the same as having secure, affordable energy.
And until the conflicts disrupting international energy supplies are resolved, consumers and businesses should expect considerable uncertainty.