Crude Oil Slips 2% on Weak Demand, Rising US Stockpiles

By Adedapo Adesanya

Crude oil declined by more than ​2 per cent on Thursday as investors focused on signs of weaker global demand and a sharp build ‌in inventories in the United States.

Brent futures finished $1.91 or 2.15 per cent lower to $87.07 a barrel, while the US West Texas Intermediate (WTI) crude lost $2.02 or 2.4 per cent to close at $81.25 a barrel.

Investors weighed data from the US Energy Information Administration on Wednesday that showed commercial crude oil inventories in the world’s largest oil producer made their largest weekly gain since January 2023 ​as exports slumped. Crude inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, their highest ⁠since June 5, the EIA said.

This comes as the Organisation of the Petroleum Exporting Countries (OPEC) lowered its world oil demand growth forecast for 2026 to 580,000 barrels per day in its monthly oil market report.

The International Energy ​Agency (IEA) also said it expected a contraction of 1.6 million barrels per day in consumption this year, versus a drop of 1 million barrels per day forecast last month, with demand curtailed by higher prices and restricted ​supply due to the US-Israeli war with Iran.

Pressure came after a report that Yemen’s Houthi militant group attacked an Aramco refinery in Saudi Arabia’s Jazan with two drones on Thursday. News of the attacks sent diesel cracks to an all-time high as the Jazan refinery has the capacity to produce 250,000 barrels per day of ultra-low sulfur diesel.

Despite the recent decline, supply disruptions in the Middle East and the Black Sea region continued to support oil prices, with the US and ‌Iran making competing ⁠claims over the Strait of Hormuz, through which about 20 per cent of global oil supply passed before the start of the Iran war.

Iran said once again that the strait is under its control on Thursday, a day after President Donald Trump said the US had “total control” of the waterway.

Prices have spiked and crashed so many times due to negotiations, threats, Iranian attacks on tankers, American blockades on Iran’s oil exports, and numerous pledges of “strong responses” from both sides.

Adding to market tightness, Russia’s seaborne oil product exports fell sharply in ⁠July after Ukrainian ​drone attacks led to unplanned maintenance at key domestic refineries. In ​the Russian city of Orsk, an oil refinery that was hit by a Ukrainian drone strike two days ago has been forced to shut down, and repairs could take up to six months.