Oil Prices Rise Amid US-Iran Talks Impasse and Global Demand Cuts
Oil prices rose slightly on August 12 as attacks in the Middle East continued and US-Iran talks hit an impasse. Brent futures settled up $0.07 at $88.98 a barrel, while US West Texas Intermediate crude rose $0.07 to $83.27.
The gains were limited after forecasters cut global oil demand projections for 2026. Opec lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day, and the International Energy Agency (IEA) cut its 2026 demand projections, expecting a 1.6 million bpd contraction.
However, the IEA also predicted a 4.3 million bpd drop in supply in 2026, resulting in an overall 2026 deficit of around 1.27 million bpd. Simon Wong, portfolio manager at Gabelli, said that the demand cut was not surprising, given the closure of the Strait of Hormuz and reduced refinery runs.
The continued strength in oil prices comes as markets grow increasingly doubtful that an agreement can soon be reached to ease disruptions to crude flows from the region or prevent another escalation of the conflict. Simon-Peter Massabni, head of business development at brokerage XS.com, said 'The key question is, after the war, how much of that demand will actually come back? I don’t think all of it will.'