Oil prices dropped by more than a dollar on Thursday after analysts lowered their global oil demand forecasts for 2026 due to disruptions caused by the war with Iran; however, supply constraints resulting from the conflict kept prices at relatively elevated levels.
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Brent crude futures fell $1.29, or 1.5%, to $87.69 a barrel. U.S. West Texas Intermediate (WTI) crude slid $1.30, or 1.6%, to $81.97.
The Organization of the Petroleum Exporting Countries (OPEC) reduced its forecast for global oil demand growth this year to 580,000 barrels per day (bpd) in its monthly oil market report released Wednesday.
On the same day, the International Energy Agency (IEA) stated that it expects consumption to contract by 1.6 million bpd this year, driven by fuel supply restrictions and high prices stemming from the U.S.-Israeli war on Iran, which has dampened demand.
Oil prices were also under pressure due to a surprise surge in U.S. commercial crude inventories, which recorded their largest weekly build last week since January 2023 amid falling exports, according to the Energy Information Administration (EIA) on Wednesday.
The EIA reported that crude inventories surged by 17.4 million barrels to 424.4 million barrels in the week ending August 7—the highest level since June 5—compared with analyst expectations in a Reuters poll for a 1.4 million-barrel drawdown.
Nevertheless, stalled talks between Iran and the United States aimed at ending the war kept prices from falling further.
A senior Iranian source said Wednesday that no progress had been made in talks to revive the temporary agreement reached in June and establish a timeframe for its implementation.
Attacks on shipping traffic in the Straits of Hormuz and Bab al-Mandab on Tuesday—two critical pathways for Middle Eastern oil and gas exports—underscore the ongoing severity of risks threatening crude supply in the region.
"Security conditions for navigation in these waters have further deteriorated, forcing vessels to turn off their AIS signals. This reduces maritime shipping transparency and makes it difficult for the market to track and assess actual supply levels," analysts at Haitong Futures wrote in a note.
Reuters
