Oil prices fell more than 1.5 percent as demand forecasts were lowered for 2026, though geopolitical tensions and supply constraints provided some price support.
International crude markets experienced a notable pullback on Thursday, with both benchmark indices recording losses exceeding 1.5 percent. Brent crude futures declined by $1.29 to settle at $87.69 per barrel, while U.S. West Texas Intermediate fell $1.30 to $81.97, as demand concerns outweighed supply-side pressures.
The price weakness reflected downward revisions to global consumption estimates. The Organisation of Petroleum Exporting Countries reduced its 2026 oil demand growth forecast to 580,000 barrels per day, while the International Energy Agency projected a sharper-than-expected 1.6 million barrel-per-day contraction in consumption this year, citing restricted fuel supplies and elevated prices stemming from regional conflicts. Additional downward pressure came from unexpectedly robust U.S. crude inventories, which surged by 17.4 million barrels to reach their highest level since June, contrary to analyst expectations for a drawdown.
Despite the demand headwinds, prices remained cushioned by persistent geopolitical risks. Stalled negotiations between Iran and the United States regarding a proposed interim agreement have kept markets cautious about future supply disruptions. Ongoing attacks on shipping lanes in the Strait of Hormuz and Bab el-Mandeb Strait have heightened concerns about crude export reliability from the Middle East. Market analysts noted that reduced vessel signal transparency in these critical waterways complicates efforts to accurately monitor actual supply flows.
The conflicting pressures between weakening demand indicators and supply-side risks have created a delicate balance in crude markets, leaving prices volatile as traders assess competing economic and geopolitical factors.
