Oil falls on weaker demand outlook and higher US stocks
- Brent futures were down $2.20, or 2.47%, at $86.78 a barrel
Oil prices dropped due to revised lower global demand forecasts and a surprise build in US crude inventories, despite ongoing geopolitical tensions from the US-Israeli war on Iran.
- Lowered global oil demand growth forecasts by OPEC and IEA.
- Significant increase in US commercial crude oil inventories.
- Deadlocked US-Iran talks and Middle East shipping risks.
LONDON: Oil prices declined on Thursday as investors assessed prospects for weaker global demand this year and higher US crude stocks, though prices found support from a lack of progress in talks over the blockaded Strait of Hormuz and disruptions to supply.
Brent futures were down $2.20, or 2.47%, at $86.78 a barrel by 1324 GMT, trimming gains accumulated over the previous six sessions.
US West Texas Intermediate (WTI) crude fell $2.34, or 2.81%, to $80.93 after advancing over the past five sessions.
The large crude stocks build in the U.S. last week is a headwind for prices, said UBS analyst Giovanni Staunovo, adding that the downside should be limited as long as flows through the Strait of Hormuz remain depressed.
US commercial crude oil inventories made their largest weekly gain since January 2023 as exports slumped, data from the Energy Information Administration showed on Wednesday.
Crude inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, their highest since June 5, the EIA said.
A Reuters poll of analysts had predicted a draw of 1.4 million barrels.
Iran, US make competing claims over control of Strait of Hormuz
Meanwhile, OPEC lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day in its monthly oil market report.
The IEA said it expected a contraction of 1.6 million bpd in consumption this year, versus a forecast of 1 million bpd last month, with demand curtailed by higher prices and restricted supply due to the U.S.-Israeli war with Iran.
Supply disruptions in the Middle East and the Black Sea region continued to support oil prices, with the U.S. and Iran making competing claims over the Strait of Hormuz.
The strait is “under Iran’s control and management”, the recently appointed head of Iran’s Basij paramilitary unit said on Thursday, a day after US President Donald Trump said the United States had “total control” of the strategic waterway.
Strait of Hormuz vessel crossings excluding container ships dropped to five on Wednesday, their lowest in three weeks, Kpler shipping data showed.
US, Iran agree to extend ceasefire as Pakistan steps up mediation: report
Adding to market tightness, Russia’s seaborne oil product exports in July dropped by 33.3% on a daily basis from June and 54.7% from the same month a year ago to 3.93 million metric tons after Ukrainian drone attacks led to unplanned maintenance at key domestic refineries, industry sources said and Reuters calculations show.
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