Oil Prices Plunge as Demand Forecasts Deteriorate Amid US-Iran Conflict
Oil prices declined on Thursday as forecasters lowered their global oil demand projections for 2026 due to disruptions from the US-Israeli war on Iran, despite the supply constraints keeping a floor in the market.
The Organisation of Petroleum Exporting Countries (OPEC) cut its world oil demand growth forecast for 2026 to 580,000 barrels per day in its monthly oil market report on Wednesday. The International Energy Agency also reduced its consumption forecast, expecting a 1.6 million bpd contraction this year due to restricted fuel supplies and higher prices.
Oil prices were further pressured by a surprise build in US commercial crude oil inventories, which rose by 17.4 million barrels to 424.4 million barrels in the week ended August 7, their highest since June 5. Despite the inventory increase, the deadlocked talks between Iran and the US have kept prices elevated.
Analysts at Haitong Futures noted that the safety situation for navigation in crucial export routes has deteriorated, forcing vessels to turn off their signals and reducing transparency in shipping. The attacks on shipping in the Strait of Hormuz and Bab el-Mandeb Strait highlight the risks remaining for crude supply from the region.