Oil Prices Fall Over 1% as OPEC and IEA Cut 2026 Demand Forecasts

Key Takeaways

• WTI crude traded near $82.29 before extending its decline to $81.97, while Brent crude fell 1.5% to $87.69.
• OPEC cut its 2026 oil-demand growth forecast to 580,000 barrels per day, while the IEA projected an outright contraction of 1.6 million barrels per day.
• A 17.4-million-barrel increase in US crude inventories outweighed stalled Iran talks and continuing shipping risks around the Strait of Hormuz and the Red Sea.

Oil Prices Slide as Demand Concerns Take Control

Oil prices fell by more than 1% on Thursday, August 13, as weaker global demand forecasts and a surprisingly large increase in US crude inventories temporarily overshadowed continuing supply risks in the Middle East.

During early Asian trading, West Texas Intermediate crude moved through $82.29 per barrel before extending its decline. By 01:00 GMT, WTI futures had fallen $1.30, or 1.6%, to $81.97 per barrel. Brent crude futures dropped $1.29, or 1.5%, to $87.69. Market pricing data showed that both benchmarks were under sustained selling pressure despite the unresolved disruption to important regional shipping routes.

The decline highlighted a conflict currently shaping the oil market. Concerns about weaker consumption and rising US inventories are placing downward pressure on prices, while constrained Middle East exports, depleted global stocks and attacks on commercial vessels continue to support a substantial geopolitical risk premium.

OPEC and IEA Deliver More Cautious Demand Forecasts

OPEC lowered its forecast for global oil-demand growth in 2026 to 580,000 barrels per day, down from an earlier estimate of 780,000 barrels per day. The revision reflected the effect of high fuel costs, disrupted supply chains and weaker consumption following months of conflict-related volatility.

OPEC still expects global demand to expand this year, but its forecast contrasts sharply with the International Energy Agency’s more pessimistic assessment.

The IEA’s August Oil Market Report projected that global oil demand will fall by an average of 1.6 million barrels per day in 2026. That represents a further downgrade of 510,000 barrels per day from its July estimate.

Demand contracted by an estimated 4.9 million barrels per day year over year during the second quarter and is expected to fall by 2.8 million barrels per day in the third quarter. The IEA nevertheless expects consumption to return to growth of approximately 580,000 barrels per day during the final quarter.

High fuel prices are one part of the demand slowdown. The continuing restrictions around the Strait of Hormuz have also reduced the availability of crude oil and refined products, disrupted international supply chains and forced some consumers to reduce energy use.

However, weaker demand does not necessarily mean the market has sufficient supply. The IEA forecasts global oil production to fall by 4.3 million barrels per day in 2026, exceeding the projected decline in consumption. Its estimated third-quarter market deficit has widened to 1.8 million barrels per day, compared with approximately 800,000 barrels per day in the previous report.

US Crude Inventories Rise by 17.4 Million Barrels

A sharp increase in US commercial crude inventories provided another reason for traders to reduce exposure to oil.

The US Energy Information Administration’s weekly report showed that commercial crude stocks increased by 17.4 million barrels during the week ending August 7. Total inventories reached 424.4 million barrels, marking the largest weekly increase since January 2023.

The increase was driven partly by higher imports and weaker exports. US crude imports rose by approximately 1.14 million barrels per day to 7.3 million barrels per day.

The headline figure was bearish for oil prices, although the wider inventory data presented a more balanced picture. Commercial crude stocks remained approximately 2% below their five-year seasonal average. Gasoline inventories declined by one million barrels and stood 6% below their five-year average, while distillate stocks were around 12% below average.

This suggests that a single large crude build does not necessarily confirm a sustained collapse in US fuel demand. Nevertheless, the surprise increase added immediate selling pressure at a time when OPEC and the IEA were already lowering their consumption forecasts.

Middle East Supply Risks Continue to Support Oil

The decline in oil prices came despite little progress in negotiations intended to ease the conflict and reopen major shipping routes.

Talks between the United States and Iran remained deadlocked, with no clear timetable for restoring the earlier interim agreement. Recent attacks on vessels near the Strait of Hormuz, the Gulf of Oman and the Bab el-Mandeb Strait have also increased the risks facing ships carrying crude oil, refined products and liquefied natural gas.

The Strait of Hormuz remains especially important because it normally handles a substantial share of global oil trade. EIA estimates show that crude oil and petroleum-liquid flows through the strait averaged only 4.9 million barrels per day during the second quarter, down from 21.6 million barrels per day in the fourth quarter of 2025.

The agency’s latest global oil outlook assumes that traffic will remain severely restricted through August before gradually improving in September. Any further delay could keep Gulf production offline and deepen the drawdown in global inventories.

The IEA estimated that observed global oil stocks fell by 69 million barrels in July, leaving total inventories below 7.9 billion barrels for the first time since April 2025. Inventories have declined by approximately 410 million barrels since the beginning of the conflict, reducing the buffer available to absorb further supply disruptions.

What Could Move Oil Prices Next?

The immediate direction of oil prices is likely to depend on whether demand concerns or geopolitical supply risks become the dominant market catalyst.

Progress towards reopening the Strait of Hormuz could remove part of the geopolitical premium currently embedded in Brent and WTI prices. In that scenario, lower demand forecasts and rising US crude inventories could place further pressure on the market.

A renewed escalation, additional attacks on vessels or a longer closure would produce the opposite risk. With global inventories already falling and the IEA projecting a third-quarter supply deficit, even a relatively small disruption could trigger another sharp increase in prices.

The EIA currently forecasts Brent crude to average around $85 per barrel in the third quarter. Its baseline scenario sees Brent declining towards an average of $78 in the fourth quarter as Hormuz traffic gradually recovers and shut-in production returns. That outlook remains highly dependent on diplomatic progress and improvements in maritime security.

Conclusion

Oil prices fell more than 1% as lower OPEC and IEA demand forecasts combined with a 17.4-million-barrel increase in US crude inventories. These factors outweighed Middle East tensions during Thursday’s session, pushing WTI below $82 and Brent below $88.

The decline does not mean that supply risks have disappeared. Global inventories are being depleted, major shipping routes remain disrupted and negotiations have yet to deliver a lasting solution. With weaker demand pulling prices lower and constrained supply providing support, volatility in the oil market is likely to remain elevated.