Oil prices declined on Thursday after posting gains in previous sessions as markets shifted their focus towards a weaker global demand outlook, while uncertainty over the reopening of the Strait of Hormuz continued to support prices.
Brent crude futures fell 42 cents, or 0.47 per cent, to $88.56 a barrel by 0405 GMT, trimming gains recorded over the previous six sessions.
US West Texas Intermediate (WTI) crude also declined, falling 55 cents, or 0.66 per cent, to $82.72 a barrel after rising for five consecutive sessions.
The price declines came amid a lack of progress in talks between the United States and Iran over an interim agreement and the reopening of the strategically important Strait of Hormuz.
A senior Iranian source said on Wednesday that there had been no progress in talks aimed at reviving an interim deal agreed in June and establishing a timeframe for its implementation.
“There was little in the way of fresh developments between the U.S. and Iran, with both sides remaining in a deadlock,” ING analysts said in a note.
The analysts also noted that a major drone attack on Russia’s Novorossiysk port appeared to have spared oil infrastructure, with no reports of damage to oil terminals.
With no clear progress towards reopening the Strait of Hormuz, attention has increasingly shifted towards the global oil demand outlook.
The shift followed a surprise increase in US crude inventories and downward revisions to global oil consumption forecasts by the Organisation of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).
Data from the US Energy Information Administration showed that commercial crude oil inventories recorded their largest weekly increase since January 2023, largely as exports declined.
US crude inventories increased by 17.4 million barrels to 424.4 million barrels in the week ended August 7. The figure was significantly above analysts’ expectations of a 1.4 million-barrel draw, according to a Reuters poll.
The latest inventory level was also the highest recorded since June 5.
Meanwhile, OPEC lowered its forecast for global oil demand growth in 2026 to 580,000 barrels per day in its latest monthly oil market report.
The IEA went further, forecasting a 1.6 million barrels per day contraction in global oil consumption this year, compared with its previous forecast of a 1 million barrels per day decline.
The agency attributed the weaker outlook to higher oil prices and restricted supply resulting from the ongoing US-Israeli conflict with Iran.
Despite the weaker demand outlook, the continued deadlock between Iran and the United States has helped provide a floor for oil prices, as traders remain concerned about supply disruptions and shipping risks in the Gulf.
Haitong Futures analysts said the security situation for navigation in the region had deteriorated further, forcing some vessels to turn off their signals.
They warned that reduced visibility of shipping movements could make it more difficult for the market to track and assess actual oil supply levels.
For now, traders are balancing concerns over weakening demand and rising inventories against the risk that continued disruption around the Strait of Hormuz could further tighten global oil supplies.
