Oil Prices Slip Below $88 Amid Rising US Inventories

Oil prices have slipped below $88 per barrel despite ongoing concerns about Iran's ability to export crude. The Brent crude benchmark fell 1.3% to $87.86 in Asian trading on Thursday, while WTI dropped 1.4% to $82.13. This reversal comes just two days after Brent returned to $90 as traders grew less confident that Washington and Tehran were close to an agreement capable of restoring normal traffic through the Strait of Hormuz.

The Iran risk has not disappeared, but what has changed is the other side of the equation: inventories are rising in the US while global demand expectations are deteriorating. According to the Energy Information Administration, US crude inventories jumped 17.4 million barrels in the week ended August 7 to 424.4 million barrels, exceeding analysts' expected decline of about 600,000 barrels.

The build was driven by higher imports and weaker exports, with imports rising by 1.1 million barrels a day to 7.3 million, while exports fell by 627,000 barrels a day to 3.1 million. Antonio Di Giacomo, senior market analyst at XS.com, warned that continued inventory accumulation alongside weaker fuel consumption could reduce the ability of geopolitical risks to push crude prices higher.