Oil drops as cratering demand forecasts overshadow deadlocked Strait of Hormuz peace talks

Oil prices dropped significantly on Thursday, August 13, 2026, as forecasters revised downward global oil demand predictions for 2026 due to the US-Israeli war on Iran, despite supply constraints providing a price floor. Brent futures slipped to $11,333.89 a barrel, a 1.5 percent decline, while US West Texas Intermediate (WTI) crude fell to $10,598.43, a 1.6 percent decrease.

The Organisation of Petroleum Exporting Countries (OPEC) reduced its world oil demand growth forecast for 2026 to 580,000 barrels per day, and the International Energy Agency (IEA) expects a 1.6 million barrel per day contraction in consumption, down from a previous 1 million bpd forecast, due to supply disruptions and higher prices caused by the conflict.

The US Energy Information Administration reported a substantial increase in US commercial crude oil inventories, with a record 17.4 million barrels added to the nation's stockpiles, the highest since June 2023, as exports declined. Despite these factors, the ongoing deadlock in negotiations between Iran and the US to conclude the war in the Gulf has maintained elevated oil prices.

An Iranian source confirmed on Wednesday that no progress has been made in reviving the interim deal from June and determining its implementation timeline. Recent attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait, vital export routes for Middle Eastern oil and gas, underscore the ongoing supply risks in the region.

Analysts at Haitong Futures noted that the deteriorating safety conditions in these waters, forcing vessels to turn off their signals, reduce transparency in shipping and make it harder for the market to gauge actual supply levels.