Oil settles down 2% on weak demand outlook, hefty US crude build
Opec lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day
Brent and US crude futures settled more than 2% lower on Thursday (Aug 13), after a week of gains. The drop came as investors focused on weaker global demand signs and a sharp increase in US crude inventories. Brent futures closed at US$87.07 a barrel, down 2.15% from their previous level, while US West Texas Intermediate (WTI) crude ended at US$81.25 a barrel, down 2.4% after climbing for five sessions.
The decline was triggered by reports that Yemen's Houthis targeted a Saudi Aramco refinery with drones, raising supply disruption concerns in an already tight global market. US Energy Information Administration data showed US commercial crude oil inventories surged by 17.4 million barrels to 424.4 million barrels in the week ending Aug 7, their highest level since June 5.
Opec reduced its forecast for world oil demand growth in 2026 to 580,000 barrels per day. The International Energy Agency also warned of a 1.6 million bpd reduction in consumption this year, due to higher prices and supply restrictions from the US-Israeli conflict with Iran. However, oil prices were pressured after Yemen's Houthi-run Saba news agency reported an attack on an Aramco refinery in Saudi Arabia's Jazan with two drones, sending diesel cracks to an all-time high.
The Jazan refinery, which can produce 250,000 bpd of ultra-low sulfur diesel, was attacked in retaliation for Saudi violations of Yemeni airspace and sovereignty in Saada and Hajjah provinces. Saudi Arabia has not commented on the report. Supply disruptions in the Middle East and Black Sea region continue to support oil prices, as the US and Iran clash over control of the Strait of Hormuz, which handles about 20% of global oil supply.
Iran claims the strait is under its control, while the US asserts it has "total control." The Strait of Hormuz is under dispute, with conflicting statements from Iran and the US, and traders assess the extent of disruption after US Energy Secretary Chris Wright said around 9 million bpd of oil were passing through the strait weekly, while vessel crossings excluding container ships dropped to five on Wednesday, the lowest in three weeks.
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