Oil Prices Fall Over 1% as Weak Demand Forecasts Outweigh Middle East Supply Risks

Oil prices fell more than 1% in Asian trading on Thursday, as grim forecasts for global demand from two major energy bodies overshadowed persistent supply risks stemming from geopolitical tensions in the Middle East.

By 22:07 ET (02:07 GMT), Brent crude futures had dropped 1.15% to $87.96 a barrel, while West Texas Intermediate (WTI) crude futures were down 1.2% at $82.24 a barrel. The decline followed a volatile session on Wednesday as traders weighed conflicting market signals.

Demand Outlook Dims

The primary driver for the price drop came from monthly reports issued Wednesday by the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA), both of which cut their demand forecasts for 2026.

• OPEC reduced its global oil demand growth forecast for 2026 to 580,000 barrels per day (bpd), marking its fourth downward revision this year.
• The IEA now anticipates a 1.6 million bpd drop in oil demand for the year, a sharp reversal from its previous forecast of 1 million bpd in growth.

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Both organizations cited concerns over cooling global economic growth. Adding to the bearish sentiment, recent data revealed a surprise inventory build in the United States, with crude stockpiles rising by 17.4 million barrels last week.

Supply Tensions Provide a Floor

Despite the weakening demand outlook, crude prices remain elevated compared to recent weeks due to significant supply-side risks. Tensions between the U.S. and Iran over control of the Strait of Hormuz, a critical chokepoint for global oil shipments, continue to simmer. The waterway accounted for approximately 20% of the world's oil consumption before the conflict escalated.

Shipping data indicates that activity in the region has largely stalled amid heightened military posturing. Further threats to global supply chains have emerged from attacks by Iran-backed Houthi militants on vessels in the Red Sea and the Bab el-Mandeb Strait, another key route for oil tankers.