Oil Prices Decline Amid OPEC’s 2026 Demand Forecast Cuts and Ongoing Supply Risks from Iran Conflict
Oil prices fell by more than $1 on Thursday, driven by a weaker outlook for global demand. The decline occurred amid ongoing supply disruptions linked to the Middle East conflict. As of 7:40 am IST, global benchmark Brent crude was down 0.92% at $88.16 a barrel, while WTI crude fell 1.07% to $82.38 a barrel.
OPEC and IEA Adjust Demand Forecasts
OPEC has revised its forecast for global oil demand growth in 2026 to 580,000 barrels per day (bpd) in its latest monthly report. The International Energy Agency (IEA) has also lowered its outlook, now expecting a decline in oil consumption of 1.6 million bpd this year, compared to its previous estimate of a 1 million bpd drop. The IEA attributed this adjustment to restricted fuel supplies and higher prices resulting from disruptions in the Strait of Hormuz.
US Crude Inventories Surge
US crude inventories saw a significant increase last week, rising by 17.4 million barrels to reach 424.4 million barrels for the week ending August 7, according to the Energy Information Administration. This marks the largest weekly increase since January 2023 and brings inventories to their highest level since June 5. Analysts had anticipated a decrease of 1.4 million barrels.
Middle East Tensions Impact Supply
Negotiations between Iran and the US to resolve the Gulf conflict have not progressed, with a senior Iranian source indicating no advancements in talks to revive a previously agreed interim deal. Additionally, recent attacks on shipping routes in the Strait of Hormuz and the Bab el-Mandeb Strait have raised concerns about the safety of navigation in these critical areas. Analysts at Haitong Futures noted that the deteriorating safety situation has forced vessels to turn off their signals, complicating market assessments of actual supply levels.
The ongoing tensions and disruptions are also affecting refineries, as the conflict in Iran, Ukrainian attacks on Russian energy infrastructure, and China’s restrictions on fuel exports have removed millions of barrels of refined products from global markets.
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