By Business Insider Reporter
The global oil market has swung into surplus, with crude supply exceeding demand by an estimated 1.4 million barrels a day in October, raising prospects of lower energy costs for import-dependent economies such as Tanzania.
The changing market conditions come after months of supply disruptions associated with the war in the Middle East, which pushed international oil prices higher and increased the cost of petroleum imports for countries dependent on external supplies.
According to the International Energy Agency (IEA), global oil supply increased by 2.5 million barrels per day in September 2026 to reach 102.3 million barrels daily. However, the supply recovery is occurring alongside weakening consumption, with global oil demand forecast to decline by 2.6 million barrels per day year-on-year in 2026, averaging 102.4 million barrels daily.
The agency expects the slowdown to persist into the final quarter, when demand is projected to fall by 2.5 million barrels per day compared with the corresponding period last year, reflecting continued weakness in global consumption.
Investment bank JPMorgan estimates that global oil supply exceeded demand by 1.4 million barrels a day in October, largely reflecting the recovery of Middle Eastern exports towards pre-conflict levels.
The supply rebound is also being reinforced by increased production in Latin America, where output has risen by about 1.5 million barrels a day compared with a year earlier.
The recovery is expected to accelerate as Saudi Arabia increases production and exports. HSBC forecasts that Saudi crude production will reach 8.3 million barrels a day in the fourth quarter of 2026, up from its earlier estimate of 6.3 million barrels.
The changing supply-demand balance has contributed to a 20 percent decline in crude prices from their peak earlier this year, offering the prospect of relief for economies facing substantial petroleum import costs.
“International oil prices staged a recovery on Thursday, November 5, after suffering their sharpest daily decline in recent months. Brent crude futures gained US$3.67, or 3.88 percent, to settle at US$98.29 per barrel, while US West Texas Intermediate (WTI) rose US$2.40, or 2.72 per cent, to US$90.52,” IEA said in market report.
The rebound followed renewed attacks on oil tankers in the Middle East, highlighting persistent supply security risks despite growing expectations of an easing global oil market
Tanzania’s growing exposure
For Tanzania, the development comes against the backdrop of a rapidly expanding petroleum import bill, which has become an important source of pressure on the country’s external payments position.
The Bank of Tanzania’s October 2026 Monthly Economic Review (MER) shows that imports of petroleum products increased by 72.3 percent to US$3.814 billion in the year ending September 2026, from US$2.213 billion in the corresponding period a year earlier.
“Imports of petroleum products, which accounts for about 20 percent of goods imports, surged by 72.3 percent to US$3,813.6 million owing to elevated global prices amid geopolitical tensions in the Middle East,” the central bank (BoT) said in the October MER.
The prospect of an easing global oil market has yet to translate into lower fuel prices in Tanzania, where domestic pump prices moved in the opposite direction in November. The Energy and Water Utilities Regulatory Authority (EWURA) raised the maximum retail price of petrol in Dar es Salaam by TSh26 to TSh4,083 per litre, while diesel increased by TSh42 to TSh4,128 and kerosene by TSh50 to TSh4,117, effective November 4.
The increase highlights the lag between movements in international crude prices and their impact on domestic fuel costs. Tanzania imports refined petroleum products, meaning local prices are influenced by international refined-product prices, shipping and insurance costs, exchange-rate movements, taxes and other regulatory charges, rather than crude oil prices alone.
The BoT reported that average international crude oil prices increased by 21.2 percent to US$102.3 per barrel in September, from US$84.4 in August.
The central bank warned that the development carries wider economic implications, noting that “elevated global energy and fertilizer prices pose risks to the economic outlook by raising import costs and fueling domestic inflationary pressures”.
The implications extend beyond the petroleum sector. Higher fuel import expenditure increases demand for foreign currency, potentially putting pressure on the exchange rate while raising transportation, manufacturing and distribution costs.
Local analysts said a sustained decline in international oil prices could provide significant relief to Tanzania, which relies heavily on imported petroleum products, through several economic channels.
A lower import bill would reduce the amount of foreign exchange required to finance petroleum purchases, potentially easing pressure on the country’s external account and supporting currency stability.
Businesses could also benefit from lower operating and logistics costs, while households could gain from reduced transport and other fuel-related expenses. However, the extent of these benefits will depend on how quickly international price movements translate into lower import costs and domestic pump prices.
