Oil Eases as Weaker Demand Outlook Counters Mideast Supply Concerns

Oil prices experienced a dip on Thursday, reversing earlier gains as market attention shifted to forecasts of diminished global oil demand for the current year. Brent futures settled 0.47% lower at $88.56 a barrel, while US West Texas Intermediate (WTI) crude fell 0.66% to $82.72.

The market's focus moved away from potential supply disruptions, particularly concerning the Strait of Hormuz, as there were no significant developments reported. Instead, traders are now weighing a surprise increase in U.S. crude inventories against reduced consumption forecasts from major energy organizations. Data from the Energy Information Administration revealed that U.S. commercial crude inventories surged by 17.4 million barrels in the week ending August 7, reaching their highest level since June 5.

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There was little in the way of fresh developments between the US and Iran, with both sides remaining in a deadlock.

Adding to the bearish sentiment, the Organization of the Petroleum Exporting Countries (OPEC) revised its world oil demand growth forecast for 2026 downward to 580,000 barrels per day. Concurrently, the International Energy Agency (IEA) anticipates a contraction in oil consumption by 1.6 million barrels per day this year, a downward revision from its previous forecast. These adjustments reflect concerns about the impact of higher prices and restricted supply on global demand.

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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.