Oil drops on lower demand forecasts despite deadlock in US-Iran talks
Opec lowers its world oil demand growth forecast for 2026 to 580,000 barrels per day
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[BEIJING] Oil prices fell more than US$1 on Thursday (Aug 13) as forecasters lowered global oil demand projections for 2026 because of the disruptions from the US-Israeli war on Iran, though the supply constraints from the conflict provided a floor for the market.
Brent futures dropped US$1.29, or 1.5 per cent, at US$87.69 a barrel by 0100 GMT. US West Texas Intermediate crude fell US$1.30, or 1.6 per cent, to US$81.97.
The Organisation of Petroleum Exporting Countries lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day (bpd) in its monthly oil market report on Wednesday.
On the same day, the International Energy Agency said it expects a 1.6 million bpd contraction in consumption in 2026, down from a forecast of 1 million bpd in July.
This comes as restricted fuel supplies and higher prices from the US-Israeli war on Iran that have curtailed demand.
Oil prices were also under pressure from a surprise build in US commercial crude oil inventories, which posted their largest weekly gain since January 2023 last week as exports slumped, the Energy Information Administration (EIA) said on Wednesday.
Crude inventories rose by 17.4 million barrels to 424.4 million barrels in the week ended Aug 7, their highest since Jun 5, the EIA said, compared with analysts’ expectations in a Reuters poll for a 1.4 million-barrel draw.
Still, the deadlocked talks between Iran and the US to end the war in the Gulf have kept prices elevated.
A senior Iranian source said on Wednesday that there had been no progress in talks to revive the interim deal agreed in June and define a time frame to implement it.
Attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday, two crucial export routes for Middle Eastern oil and gas, highlight the risks that remain for crude supply from the region.
“The safety situation for navigation in these waters has further deteriorated, forcing vessels to turn off their signals, which reduces transparency in shipping and makes it more difficult for the market to track and assess actual supply levels,” analysts at Haitong Futures said in a note. REUTERS
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