Oil Prices Slide as Weakened Demand Forecasts Outweigh Supply Uncertainty

Oil prices dropped sharply in Asian trade on Thursday as weak demand forecasts from major industry bodies overshadowed continued uncertainty over supply disruptions in West Asia. The Organization of Petroleum Exporting Countries and the International Energy Agency both trimmed their 2026 oil demand forecasts, with OPEC cutting its global oil demand growth forecast for 2026 to 580,000 barrels per day.

The IEA forecast a 1.6 million bpd drop in oil demand this year, down from its prior forecast for growth of 1 million bpd. This was due to concerns over cooling economic growth, restricted fuel supplies, and rising prices stemming from the US-Israeli war on Iran.

Data also showed a surprise build in US oil inventories last week, although other data indicated a sharp contraction in Washington's Strategic Petroleum Reserve. The Strait of Hormuz remains a key point of focus for oil markets, given that it supplied roughly 20% of the world's oil consumption prior to the Iran war.