Oil prices slipped by more than $1 on Thursday as a weaker outlook for global demand put further pressure on the market, while supply disruptions linked to the Middle East conflict continued to limit the fall. Global benchmark Brent crude was down 0.92% at $88.16 a barrel, while WTI crude fell 1.07% to $82.38 a barrel around 7:40 am IST, according to Business-Today.
OPEC and IEA downgrade demand outlooks
The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2026 to 580,000 barrels per day (bpd) in its monthly oil market report released on Wednesday, Business-Today reported. The reduction signals that the cartel sees a softer demand environment ahead, adding to the bearish tone in the market.
The International Energy Agency (IEA) also lowered its outlook for oil consumption, expecting figures to fall by 1.6 million bpd this year, compared with its earlier forecast of a 1 million bpd decline. The agency said that restricted fuel supplies and higher prices caused by the Hormuz disruption had reduced demand. Together, the two agencies' forecasts point to a weakening demand picture that is weighing on prices.
US crude inventories post record weekly build
Oil prices also came under pressure after US crude inventories rose sharply last week. Commercial crude stocks increased by 17.4 million barrels to 424.4 million barrels in the week ended August 7, the Energy Information Administration (EIA) said. It was the biggest weekly increase since January 2023 and took inventories to their highest level since June 5. Analysts polled by Reuters had expected inventories to fall by 1.4 million barrels, making the build a significant downside surprise for the market.
Middle East supply risks persist
Talks between Iran and the US to end the war in the Gulf are yet to yield peaceful resolutions. A senior Iranian source said on Wednesday that there had been no progress in talks to revive the interim deal agreed in June and set a time frame for its implementation. The lack of progress keeps the risk of supply disruptions alive.
The risks to oil and gas supplies were also highlighted by attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday, both important routes for Middle Eastern oil and gas exports. These disruptions affect the flow of crude and refined products through key chokepoints, according to the report.
"The safety situation for navigation in these waters has further deteriorated, forcing vessels to turn off their signals, which reduces transparency in shipping and makes it more difficult for the market to track and assess actual supply levels," analysts at Haitong Futures said in a note cited by Reuters.
The pressure on energy markets is also spreading to refineries, where crude oil is turned into fuel. Disruptions caused by the Iran war, Ukrainian attacks on Russian energy infrastructure and China's restrictions on fuel exports have taken millions of barrels of refined products out of global markets. This has left customers looking for other sources of supply, adding to the complexity of the supply picture.
Price outlook and market volatility
Oil prices have remained volatile since the Middle East crisis began, though the spike is far lower than the $126 per barrel levels reached during the earlier phase, according to Business-Today. The combination of demand downgrades, rising inventories and persistent geopolitical risks is keeping the market range-bound, with traders weighing the bearish demand data against the risk of further supply outages.
| Indicator | Current / Actual | Previous / Expected |
|---|---|---|
| Brent crude | $88.16/bbl, down 0.92% | — |
| WTI crude | $82.38/bbl, down 1.07% | — |
| OPEC 2026 demand growth forecast | 580,000 bpd | — |
| IEA 2026 consumption outlook | decline of 1.6 million bpd | earlier forecast: 1 million bpd decline |
| US commercial crude stocks | 424.4 million barrels (+17.4 million) | Reuters poll expected -1.4 million barrels |
| Earlier crisis price spike | — | $126/bbl |
Sources:
