Oil dropped more than 3% on Thursday as a large U.S. crude stock build and lower demand forecasts from OPEC and the IEA outweighed support from stalled talks over the Strait of Hormuz. Brent fell to $87.05 and WTI to $81.45, even as shipping data showed vessel crossings through the strait at a three-week low.
Oil prices fell more than 3% on Thursday, with the drop driven by signs of weaker global demand and a jump in U.S. crude stocks. Brent futures dropped $1.93, or 2.2%, to $87.05 a barrel at 11:01 a.m. ET, trimming gains built up over the previous six sessions. U.S. West Texas Intermediate crude fell $1.82, or 2.2%, to $81.45 after five straight days of gains. Earlier in the session, Brent slid as much as 3.5% and WTI fell by as much as 3.8%.
Crude stockpiles jump as demand forecasts shrink
UBS analyst Giovanni Staunovo said the large U.S. crude stock build is a headwind for prices, though he added the downside should stay limited as long as flows through the Strait of Hormuz remain restricted. U.S. commercial crude oil inventories rose by 17.4 million barrels to 424.4 million in the week ended August 7, their highest level since June 5 and the largest weekly gain since January 2023, the Energy Information Administration said. A Reuters poll of analysts had instead predicted a draw of 1.4 million barrels.
The demand picture worsened as well. OPEC lowered its 2026 world oil demand growth forecast to 580,000 barrels per day in its latest monthly report. The International Energy Agency, meanwhile, now expects a 1.6 million bpd contraction in consumption this year, up from a forecast of 1 million bpd last month, citing higher prices and supply curtailed by the U.S.-Israeli war with Iran.
Competing claims over Hormuz
Supply disruptions in the Middle East and the Black Sea continued to offer some support, as the U.S. and Iran traded competing claims over the Strait of Hormuz. The strait is under Iran's control, the recently appointed head of Iran's Basij paramilitary unit said Thursday, a day after President Donald Trump said the U.S. had full control of the waterway.
The market was also weighing just how much oil is actually moving through the strait. U.S. Energy Secretary Chris Wright said an average of 9 million bpd was transiting the waterway each week, with total flows including pipelines and export infrastructure averaging 15 million bpd. Yet Kpler shipping data showed vessel crossings through the strait, excluding container ships, dropped to five on Wednesday, their lowest in three weeks. According to Reuters: "Conflicting stories continue to drive the narrative as to who controls the Strait of Hormuz", said Tim Snyder, chief economist at Matador Economics.
Russian supply disruptions add to tightness
Russia's seaborne oil product exports in July dropped 33.3% from June and 54.7% from a year earlier, to 3.93 million metric tons, after Ukrainian drone attacks forced unplanned refinery maintenance. In Orsk, a refinery hit by a Ukrainian drone strike two days earlier was forced to shut down completely, with repairs that could take up to six months, the regional governor said. Separately, a blast during maintenance at a petroleum storage facility in Rotterdam killed one person and wounded several others on Thursday.
Sources: Commodities & Futures News, Reuters
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