Oil drops on lower demand forecasts despite deadlock in US-Iran talks

Oil prices fell more than $1 on Thursday as forecasters lowered global oil demand projections for 2026 because of disruptions from the U.S.-Israeli war on Iran. Brent futures dropped $1.29, or 1.5%, to $87.69 a barrel by 0100 GMT. U.S. West Texas Intermediate (WTI) crude fell $1.30, or 1.6%, to $81.97.

The Organisation of 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. On the same day, the International Energy Agency said it expects a 1.6 million bpd contraction in consumption this year, down from a forecast of 1 million bpd last month. U.S. commercial crude oil inventories posted their largest weekly gain since January 2023 last week, rising by 17.4 million barrels to 424.4 million barrels in the week ended August 7, their highest since June 5. A senior Iranian source said on Wednesday that there had been no progress in talks to revive the interim deal agreed in June. Attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait occurred on Tuesday.