Oil prices fall as IEA sees lower demand on rising fuel prices
Oil futures retreated early Wednesday morning after prices rose overnight.
Tekef
Oil prices fell Thursday after the International Energy Agency forecast lower demand this year due to rising fuel prices from the disruption in the Strait of Hormuz.
U.S. West Texas Intermediate futures fell 2.4% to close at $81.25 per barrel. Brent crude, the international benchmark, lost about 2% to settle at $87.07. Prices are up about 4% this week as a deal between Washington and Tehran still has not materialized.
Brent
Oil demand is expected to fall by 1.6 million barrels per day this year, about 510,000 bpd more than previously anticipated, according to the IEA. Renewed hostilities are undermining efforts to boost global oil supplies, the agency said. Supply was 6.3 million bpd lower year-on-year in July with 8.3 million bpd of Gulf production shut in, it said.
U.S. Energy Secretary Chris Wright said Wednesday that more oil was moving through Hormuz than independent estimates indicate. The seven-day average for exports through the strait is around 9 million bpd, Wright said.
The security situation in the Middle East remains precarious for shippers, with attacks on vessels in the Gulf of Oman and the Red Sea this week. Iran's Houthi allies in Yemen, meanwhile, claimed Thursday that they targeted a refinery in Saudi Arabia's Jizan region with drones.
The U.S. and Iran disputed who controls Hormuz this week. Tehran claims that it has closed the strait and it will only reopen the waterway after Washington meets its demands. President Donald Trump, meanwhile, claimed the U.S. has total control over Hormuz.
The Trump administration last week teased a potential deal with Iran to boost traffic through the strait, but an agreement still has not materialized.
"The lack of clarity over the possibility of a full reopening of the waterway could leave oil prices exposed to the upside at a time when the market remains tight," said Christopher Tahir, a senior market strategist at Exness, adding that any additional setbacks could drive oil prices further up.
