Oil Prices Slip Below $88 as Inventory Build and Weaker Demand Challenge Geopolitical Premium

Brent crude prices dropped below $88 per barrel on Thursday as a massive US inventory build and weaker demand forecasts challenged its geopolitical premium.

The price slipped 1.3% to $87.86 in Asian trading, while WTI fell 1.4% to $82.13. This reversal came just two days after Brent returned to $90 due to decreased confidence that Washington and Tehran were close to an agreement restoring normal traffic through the Strait of Hormuz.

Iran's risk has not disappeared; however, inventories are rising in the US while global demand expectations are deteriorating. US crude inventories jumped 17.4 million barrels in the week ended August 7 to 424.4 million barrels, according to the Energy Information Administration. Higher imports and weaker exports drove much of the build.

Analysts warn that continued inventory accumulation, particularly alongside weaker fuel consumption, could reduce the ability of geopolitical risks to push crude prices higher. The International Energy Agency expects global oil demand to contract by 1.6 million barrels a day in 2026, a steeper fall than last month's projection.