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Oil prices retreated on Thursday as investors focused on forecasts of weaker global demand, while a lack of progress towards reopening the Strait of Hormuz weighed on markets. According to Reuters, a senior Iranian source stated that negotiations between Washington and Tehran to revive an interim agreement reached in June have stalled, and analysts describe the talks as being deadlocked.
The ongoing standoff between Iran and the United States has continued to support oil prices, with Brent crude falling 0.47% to $88.56 a barrel and U.S. West Texas Intermediate dropping 0.66% to $82.72, trimming gains from recent sessions. The decrease in prices comes despite continued worries about the threat of disruption to oil supplies around the Gulf.
Attention has also turned to weakening demand, driven by rising U.S. crude inventories and cuts to global oil demand growth forecasts. The Organization of the Petroleum Exporting Countries (OPEC) trimmed its 2026 global oil demand growth forecast to 580,000 barrels per day earlier this week. Additionally, the International Energy Agency (IEA) anticipates global oil consumption to contract by 1.6 million barrels per day.
U.S. crude inventories rose by 17.4 million barrels last week to a record high of 424.4 million, their highest level since June 5. The build-up in inventories signals a decrease in consumption and could contribute to further downward pressure on oil prices in the coming weeks.
Despite these factors supporting a decline in oil prices, the Iran-U.S. deadlock and ongoing disruption risks around the Gulf continue to keep a floor under prices. Analysts warn that this combination of risks and weakening demand makes it difficult to predict a significant decline in oil prices in the short-term.
“The situation with the Strait of Hormuz remains a key concern for oil markets, and the lack of progress in talks between Iran and the U.S. does little to alleviate those concerns,” said one analyst. “While weakening demand is undoubtedly supporting oil prices downward, the uncertainty surrounding the standoff and other geopolitical risks continues to keep a lid on the market.”
Ultimately, the oil market remains closely tied to developments in the Middle East and the global demand picture. As the situation with Iran and the U.S. continues to unfold, investors will be keeping a close eye on news and developments from the region.