Crude oil prices fell by more than $1 a barrel on Thursday after analysts lowered their forecasts for global oil demand in 2026, citing disruptions caused by the ongoing US-Israeli conflict with Iran. However, concerns over potential supply disruptions from the conflict continued to limit the decline in prices. Brent crude futures fell $1.29, or 1.5%, to $87.69 a barrel, while US West Texas Intermediate (WTI) crude declined $1.30, or 1.6%, to $81.97 a barrel.
Why Are Crude Oil Prices Falling Today?
The decline in oil prices came after analysts cut their outlook for global oil demand for 2026. The conflict between the US, Israel and Iran has disrupted economic activity and raised concerns about weaker fuel consumption. At the same time, supply risks remain elevated as tensions continue around key shipping routes in the Middle East. There was little sign of progress toward reopening the Strait of Hormuz. US President Donald Trump said Washington has “total control” of the strategic waterway, while negotiations between Washington and Tehran appeared to have stalled.
Pakistan, which has been involved in mediation efforts, also said the wider peace process had reached an impasse, although the deadline for a US-Iran memorandum of understanding could still be extended.
How Is The US-Iran Conflict Affecting Oil Supply?
The Middle East conflict has kept global energy markets volatile, with traders closely watching developments between Washington and Tehran. The International Energy Agency has projected a global oil supply shortfall of 1.8 million barrels per day during the current quarter as the US-Iran conflict continues. The estimate is more than twice its previous forecast. For 2026 as a whole, the IEA expects the supply deficit to be the largest in five years.
Attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait have also highlighted the vulnerability of oil and gas supplies from the Middle East. Both waterways are important routes for energy exports.
What Is The Outlook For Oil Prices?
Despite Thursday’s decline, crude prices remain on track for a weekly gain as traders assess the possibility of further supply disruptions. The Middle East conflict, the Russia-Ukraine war and repeated attacks on energy infrastructure, including ports and refineries, have tightened global oil and refined-product markets.
An Iranian senior official told Reuters that negotiations over reviving an interim agreement reached in June had made little progress, with the two sides yet to agree on a timeline for implementation. The combination of weaker demand expectations and persistent supply risks is likely to keep oil prices volatile as markets monitor diplomatic and military developments in the region.
