Why did oil prices drop more than $1 on Thursday despite ongoing U.S.-Iran tensions?

Oil prices dropped more than $1 on Thursday because forecasters lowered global oil demand projections for 2026—OPEC cut its 2026 demand growth forecast to 580,000 barrels per day, and the IEA revised its 2024 consumption outlook downward by an additional 600,000 bpd (to a 1.6 million bpd contraction) due to restricted fuel supplies and higher prices from the U.S.-Israeli war on Iran; additionally, U.S. crude inventories surged by 17.4 million barrels—the largest weekly gain since January 2023—amplifying bearish pressure.

What role are stalled U.S.-Iran talks and regional shipping attacks playing in sustaining oil prices amid falling demand forecasts?

Despite lower demand forecasts, oil prices remained elevated due to the deadlock in U.S.-Iran talks—confirmed by a senior Iranian source stating no progress had been made in reviving the June interim deal—and renewed attacks on shipping in the Strait of Hormuz and Bab el-Mandeb Strait, which have worsened navigation safety, forced vessels to turn off signals, reduced transparency in shipping, and complicated market assessment of actual supply levels.

Oil drops on lower demand forecasts despite deadlock in US-Iran talks

Aug 12, 2026

Oil prices fell over $1 after OPEC and IEA cut 2026 demand forecasts, though Middle East conflict risks supported prices. U.S. crude inventories also rose unexpectedly amid deadlocked US-Iran negotiations.

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Oil drops on lower demand forecasts despite deadlock in US-Iran talks

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