Oil prices fell in Asian trading on Thursday, weighed down by downward revisions to 2026 oil demand forecasts from both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), despite ongoing tensions between the United States and Iran and persistent shipping risks in the Middle East. Brent Crude prices declined by 0.5% to trade at $88.56 per barrel, retreating from Wednesday's intraday high above $89 per barrel. The U.S. benchmark West Texas Intermediate (WTI) Crude fell 0.60% to $82.77 during the Asian session.
Both OPEC and the IEA released revised demand forecasts on Wednesday, citing the prolonged closure of the Strait of Hormuz as a key factor in their downward adjustments. The IEA reported in its August monthly report that it expects oil demand to decline by 1.6 million barrels per day (bpd) in 2026. This represents a reduction of 510,000 bpd from the July forecast, which had previously assumed a gradual recovery in oil flows through the Strait of Hormuz.
The IEA attributed the steeper demand contraction to the renewed hostilities that emerged at the end of July and the ongoing deadlock in U.S.-Iran negotiations, both of which are expected to drive greater demand destruction through higher price pressures than were anticipated in early July. OPEC also revised its 2026 demand forecast downward on Wednesday. While the cartel still expects overall demand growth for the year, it cut its growth projection to 580,000 bpd, down significantly from the 780,000 bpd growth forecast in the July report.
Market pressure on crude prices was further intensified by a substantial build in U.S. crude oil inventories reported by the Energy Information Administration (EIA) on Wednesday. Commercial stockpiles increased by 17.4 million barrels during the week ending August 7, bringing total inventories to 424.4 million barrels. This level is now just 2% below the five-year average for the same period.
The significant inventory build was primarily driven by a 1.14 million bpd increase in crude oil imports on a week-on-week basis, while crude oil exports declined by 627,000 bpd during the same week. Source: Oilprice.com, IEA August 2026 Oil Market Report, U.S. Energy Information Administration
Source: oilprice.com