Oil prices moved sharply lower on Thursday as traders weighed a weaker global demand outlook against continued uncertainty over energy supplies from the Gulf region.
Benchmark Brent crude futures fell 2.5% to $86.73 per barrel by 09:10 ET (13:10 GMT), while U.S. West Texas Intermediate (WTI) crude dropped 2.8% to $80.57 per barrel.
Despite Thursday’s decline, crude prices remained higher over the past week as geopolitical risks surrounding the Strait of Hormuz continued to support the market.
Strait of Hormuz Uncertainty Keeps Oil Markets Volatile
Conflicting statements from the United States and Iran over control of the Strait of Hormuz have contributed to heightened volatility in oil prices.
Progress toward an agreement to end the conflict between the two countries and restore normal shipping through the waterway has remained limited.
Both Washington and Tehran have claimed control over the strategically important shipping route. However, shipping data indicated that activity in the region remained severely restricted following military action in late July and early August.
The Strait of Hormuz has become one of the most important factors for global energy markets. Before the conflict began in late February, roughly 20% of global oil consumption passed through the waterway.
Any prolonged disruption could therefore have significant consequences for worldwide crude supplies and prices.
Red Sea Attacks Add to Supply Concerns
Additional geopolitical risks have emerged around another important shipping route.
Yemen’s Iran-backed Houthi movement has resumed attacks on vessels traveling through the Red Sea and the Bab el-Mandeb Strait.
The route represents another major corridor for global energy shipments, meaning further disruption could complicate efforts to maintain stable oil supplies.
Together, risks surrounding Hormuz and the Red Sea continue to provide some underlying support for crude prices despite concerns about weakening demand.
OPEC Cuts 2026 Oil Demand Forecast Again
Demand concerns intensified after the Organization of the Petroleum Exporting Countries (OPEC) lowered its outlook for global oil consumption.
OPEC reduced its forecast for 2026 global oil demand growth to 580,000 barrels per day.
It marked the organization’s fourth downward revision to its demand forecast this year, reinforcing concerns that slower economic activity could limit growth in crude consumption.
IEA Also Turns More Cautious on Oil Demand
The International Energy Agency (IEA) also lowered its expectations for oil demand in its latest monthly report.
According to the figures cited, the agency now expects global oil demand to decline by around 1.6 million barrels per day, compared with its previous forecast for growth of approximately 1 million barrels per day.
Both OPEC and the IEA pointed to concerns surrounding weaker economic growth, limited fuel availability and higher energy prices linked to the U.S.-Iran conflict.
The weaker demand forecasts placed additional downward pressure on crude prices despite continued supply risks in the Middle East.
U.S. Crude Inventories Surge
Oil prices also faced pressure from a significant increase in U.S. petroleum inventories.
Data showed that U.S. crude stockpiles unexpectedly increased by 17.4 million barrels during the latest reporting week.
A large inventory build can signal that available supply is exceeding near-term demand, often creating downward pressure on oil prices.
However, separate figures showed a sharp decline in the U.S. Strategic Petroleum Reserve (SPR).
The United States has drawn heavily from emergency reserves this year in an effort to offset supply disruptions linked to the conflict with Iran.
Oil Market Balances Supply Risks Against Weak Demand
Crude markets are currently being pulled in two opposing directions.
On one side, continued disruption in the Strait of Hormuz and growing security concerns around Red Sea shipping routes create significant supply risks.
On the other, weaker forecasts from OPEC and the IEA, combined with rising U.S. crude inventories, have increased concerns that global oil demand may be losing momentum.
For now, the weaker demand outlook has gained the upper hand, pushing Brent and WTI prices lower. However, any escalation in the Middle East or further disruption to major shipping routes could quickly bring supply concerns back into focus.
