Oil Prices Decline Amid US Inventory Surge and Global Demand Destruction

Oil prices have been declining over the past two days, influenced by several factors. One of the main reasons is the significant increase in US inventories, which has led to a surplus in the market.

The OPEC report shows that oil production in OPEC and OPEC+ countries increased by 1.37 million barrels per day (b/d) in July, but still remains below designated quotas. Saudi Arabia, Iraq, and Kuwait were among the countries that saw an increase in production.

Despite this, global demand is expected to continue declining, with the IEA forecasting a drop of 1.6 million b/d in 2026 due to high fuel prices and logistical disruptions.

The US Energy Information Administration (EIA) also released its STEO report, which assumes an average Brent oil price of $87/bbl in 2026, stable US output at 13.8 million b/d, and a market deficit that will persist in the fourth quarter.