Oil slips over 1% as demand outlook weakens despite Gulf supply risks

Oil prices declined by more than a dollar on Thursday, pressured by downward revisions to global demand forecasts and a surprise build in US crude stockpiles, even as supply risks from the Gulf conflict remained unresolved.

Brent crude futures were down $1.29, or 1.5%, at $87.69 per barrel, while US West Texas Intermediate (WTI) fell $1.30, or 1.6%, to $81.97.

The Organisation of Petroleum Exporting Countries trimmed its 2026 world oil demand growth projection to 580,000 barrels per day in its latest monthly report. The International Energy Agency also revised its outlook, now expecting consumption to contract by 1.6 million barrels per day this year, a sharper drop than the 1 million bpd decline it had forecast previously. The agencies attributed the weaker demand to restricted fuel supplies and higher prices stemming from the US-Israeli war on Iran.

Adding to the bearish sentiment, US commercial crude inventories posted their largest weekly gain since January 2023, rising by 17.4 million barrels to 424.4 million barrels in the week ended August 7, according to the Energy Information Administration. Analysts had expected a draw of 1.4 million barrels. The build was driven by a slump in exports.

Despite these pressures, prices found some support from the lack of progress in talks between Iran and the US. A senior Iranian source said on Wednesday that negotiations to revive the interim deal agreed in June had made no headway, with no timeframe set for implementation.

Attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday underscored the persistent risks to crude supply from the region. Analysts at Haitong Futures noted that deteriorating safety conditions have forced vessels to switch off their signals, reducing transparency in shipping and making it harder for the market to assess actual supply levels.