Oil Prices Slide as Demand Worries Outweigh Middle East Supply Risks

Crude oil prices retreated on Thursday, pressured by mounting concerns over a weakening global demand outlook and a significant, unexpected build in U.S. crude stockpiles. The bearish sentiment overshadowed persistent supply uncertainties stemming from geopolitical tensions in the Persian Gulf.

By 9:10 AM ET, the benchmark Brent crude futures contract had fallen 2.5% to $86.73 per barrel, while West Texas Intermediate (WTI) crude futures dropped 2.8% to $80.57 per barrel, according to Investing.com data.

Demand Forecasts Slashed

The market's focus has shifted towards deteriorating demand prospects after two of the world's top energy bodies issued downbeat monthly reports on Wednesday. The new forecasts suggest that high prices and an economic slowdown, which the agencies attribute in part to the conflict with Iran, are beginning to curb consumption.

Key revisions include:

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• OPEC: The Organization of the Petroleum Exporting Countries cut its 2026 global oil demand growth forecast for the fourth time this year, lowering it to 580,000 barrels per day.
• IEA: The International Energy Agency reversed its outlook entirely, now forecasting a demand *decline* of 1.6 million barrels per day this year, a stark change from its previous projection of a 1 million bpd increase.

U.S. Inventories and Geopolitical Backdrop

Adding to the downward pressure, data revealed that U.S. crude inventories unexpectedly surged by 17.4 million barrels last week, a strong indicator of slowing demand in the world's largest oil consumer. This build occurred even as separate data showed a large withdrawal from the U.S. Strategic Petroleum Reserve (SPR), which has been used to counter supply shocks from the Middle East.

Despite the day's price drop, the market remains on edge due to the stalemate between the U.S. and Iran over the Strait of Hormuz. The critical waterway, which handled about 20% of global oil supply before the conflict began, has seen shipping activity halt since late July. Tensions are further compounded by attacks from Iran-backed Houthi rebels on vessels in the Red Sea, another vital oil transit route.