Despite the ongoing stalemate in the U.S.-Iran talks and persistent risks to shipping in the Middle East, oil prices fell in Asian trading on Thursday, weighed down by cuts to 2026 oil demand forecasts from both OPEC and the International Energy Agency.
Brent Crude prices dropped by 0.5% to trade below $89 per barrel at $88.56, easing from the Wednesday intraday high of over $89 a barrel, amid demand concerns and a bearish EIA inventory report.
The U.S. benchmark, WTI Crude, traded 0.60% lower at $82.77 in the Asian session.
On Wednesday, both OPEC and the IEA slashed their oil demand forecasts for 2026 due to the ongoing closure of the Strait of Hormuz.
The IEA expects in its August monthly report that oil demand will slump by 1.6 million barrels per day (bpd) this year. That’s a 510,000 bpd decline from the expected figure in the July report, which had assumed the Strait of Hormuz oil flows would gradually rise.
However, the renewed hostilities at the end of July and the deadlock in U.S.-Iran talks have prompted the IEA to project much larger demand destruction due to higher prices than were expected in early July.
OPEC also cut its demand forecast for 2026 on Wednesday. Unlike the IEA, the cartel expects demand growth, although its outlook was slashed to 580,000 bpd, down from the 780,000 bpd growth expected in the July report.
Also weighing on oil prices was a surprise big build in U.S. crude oil inventories, which saw a massive increase of 17.4 million barrels during the week ending August 7, per data from the U.S. Energy Information Administration (EIA) out on Wednesday.
The increase brings commercial stockpiles to 424.4 million barrels, according to government data, which are now just 2% below the five-year average for this time of year. The large inventory increase was predominantly driven by a 1.14 million bpd increase in crude oil imports week-on-week, while crude exports fell by 627,000 bpd on the week to August 7.
By Tsvetana Paraskova for Oilprice.com
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