Oil prices slip as Opec cuts demand forecast; Iran war keeps supply risks alive
Oil prices have witnessed a decline due to lowered global demand forecasts and a notable increase in US inventories. Both Opec and the IEA have adjusted their oil demand growth projections downward for the near future. Ongoing tensions in the Strait of Hormuz and Bab el-Mandeb Strait are amplifying supply concerns, while negotiations between Iran and the US remain inconclusive.
Oil prices dropped by more than $1 on Thursday due to a lower-than-expected global demand outlook and ongoing supply concerns stemming from the Middle East conflict. Brent crude fell 0.92% to $88.16 a barrel, while WTI crude declined 1.07% to $82.38 a barrel. Earlier on Wednesday, OPEC reduced its global oil demand growth forecast for 2026 to 580,000 barrels per day, and the International Energy Agency also lowered its consumption outlook, anticipating a 1.6 million barrels per day drop this year due to restricted supplies and higher prices from the Hormuz disruption.
The US crude inventories surged last week, increasing by 17.4 million barrels to reach 424.4 million barrels. This was the largest weekly rise since January 2023 and pushed inventories to their highest level since June 5. Analysts had anticipated a 1.4 million barrel decline. In addition, negotiations between Iran and the US to end the Gulf war have yet to produce positive results, with Iran stating there has been no progress in discussions to revive the interim deal and set its implementation timeline.
Supply risks for oil and gas were further emphasized by attacks on shipping in the Strait of Hormuz and Bab el-Mandeb Strait, which are vital routes for Middle Eastern oil and gas exports. Vessel safety in these waters has worsened, leading to navigation signals being turned off, making it harder for the market to monitor actual supply levels.
The Iran war, Ukrainian attacks on Russian energy infrastructure, and China's restrictions on fuel exports have collectively caused refineries to lose millions of barrels of refined products from global markets, leaving customers searching for alternative supplies. Despite the Middle East crisis, oil prices have remained relatively stable compared to the $126 per barrel peak during the earlier phase.
Written by urgent.news from Times of India's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
