Oil prices fall on lower demand growth forecasts despite US-Iran deadlock

Oil prices fell more than $1 a barrel on Thursday after forecasters lowered their 2026 global oil demand projections, citing the disruption caused by the US-Israeli war on Iran — though the supply constraints stemming from that same conflict continued to put a floor under the market.

Brent crude futures dropped $1.29, or 1.5 percent, to $87.69 a barrel by 0100 GMT, while U.S. West Texas Intermediate (WTI) crude fell $1.30, or 1.6 percent, to $81.97. The moves extended a bout of volatile, headline-driven trading that has gripped the market for weeks.

Forecasters trim demand

The Organization of the Petroleum Exporting Countries lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day in its monthly oil market report on Wednesday. The same day, the International Energy Agency (IEA) said it now expects consumption to contract by 1.6 million bpd this year — a sharper drop than the 1 million bpd it had projected a month earlier — as restricted fuel supplies and higher prices tied to the war weigh on demand.

Even so, the picture is not uniformly bearish. The Paris-based IEA also forecasts a 4.3 million bpd drop in supply this year, leaving an overall 2026 deficit of around 1.27 million bpd — a shortfall that helps explain why prices have held well above pre-war levels.

A surprise inventory build

Prices were also pressured by an unexpected rise in U.S. commercial crude oil inventories, which posted their largest weekly gain since January 2023 last week as exports slumped, the Energy Information Administration said on Wednesday. Crude stocks climbed 17.4 million barrels to 424.4 million barrels in the week ended August 7 — their highest since June 5 — against analysts’ expectations in a Reuters poll for a 1.4 million-barrel draw.

Talks at an impasse, ships under attack

On the supply side, the standoff between Washington and Tehran showed no sign of easing. A senior Iranian source told Reuters there were no discussions under way to extend the ceasefire, arguing that from Tehran’s perspective the deal had no start date and so there was nothing to extend.

The United States and Yemen’s Iran-aligned Houthis reported separate 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, alongside the Suez Canal. Shipping data showed the number of vessels transiting Hormuz fell to a one-week low of eight on Tuesday; before the war, 125 to 140 vessels passed through the waterway each day.

Source: Reuters, citing OPEC, the IEA, and the U.S. Energy Information Administration. Prices as of 0100 GMT, August 13, 2026, and subject to change during trading.