OPEC, IEA Trim Oil Demand Forecasts; Crude Prices Fall on US Inventories
Global crude oil prices fell over 2% last Thursday. Major forecasters OPEC and the IEA both reduced their 2026 demand projections. A significant increase in US crude inventories also pressured prices, while Middle East supply risks limited deeper declines.
Price Retreat and US Inventory Surge
Oil futures declined more than 2% last Thursday, reversing a week of gains. Brent crude settled at $87.07 a barrel, down 2.15%, after six sessions of advances. US West Texas Intermediate (WTI) crude fell 2.4% to $81.25 a barrel. Investors focused on weaker global demand signals.
The US Energy Information Administration (EIA) reported a 17.4 million barrel increase in US commercial crude oil inventories for the week ending August 7. This pushed total inventories to 424.4 million barrels, the highest since June 2026. US crude exports also slumped during the week, the EIA added. This marked the largest weekly gain since January 2023.
Demand Outlook Weakens
Major energy bodies revised down their oil demand forecasts for 2026. OPEC lowered its world oil demand growth projection to 580,000 barrels per day (bpd) in its monthly report. Separately, the International Energy Agency (IEA) now expects a 1.6 million bpd contraction in consumption this year. This is a deeper drop than its previous forecast of 1 million bpd last month.
The IEA attributed this demand curtailment to higher prices and restricted supply. These supply issues stem from the US-Israeli war with Iran.
Geopolitical Supply Risks
Middle East and Black Sea supply disruptions continued to support prices, preventing steeper declines. Yemen's Houthi-run Saba news agency reported an attack on a Saudi Aramco refinery in Jazan last Thursday. This refinery can produce 250,000 bpd of ultra-low sulfur diesel. A Houthi military source claimed the attack was a response to Saudi actions.
Tensions also persist over the Strait of Hormuz. Iran's Basij paramilitary unit head claimed control, while US President Donald Trump asserted US control. About 20% of global oil supply passed through this strait pre-war. Russian seaborne oil product exports also fell sharply in July.
Ukrainian drone attacks caused unplanned maintenance at key domestic refineries, industry sources and Reuters calculations showed. An oil refinery in Orsk, Russia, shut down after a drone strike, with repairs potentially taking six months, the regional governor stated.
Consequence for Asian Business
The combination of lower demand forecasts and volatile supply risks presents a complex outlook for Asia. Energy-importing Asian economies face potential price instability, directly affecting industrial costs and consumer purchasing power. Sustained higher crude prices would inflate import bills for nations like Singapore, Japan, South Korea, and India.
Disruptions in Middle Eastern shipping lanes or Russian supply could force Asian refiners to seek alternative, potentially more expensive, crude sources. Businesses across the region must account for these fluctuating energy inputs when planning production and logistics.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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