Oil futures delivered a mixed performance on Wednesday as the latest monthly reports from OPEC and the International Energy Agency (IEA) pointed to a softer demand outlook, while ongoing geopolitical tensions in the Middle East continued to underpin supply risk premiums.
Brent crude slipped 0.25% to $88.69 per barrel, while West Texas Intermediate (WTI) edged up 0.22% to $83.44. Both benchmarks had climbed roughly $1 earlier in the session as traders reacted to fresh headlines around the Iran conflict and renewed attacks on commercial shipping in key waterways.
The market also digested preliminary data from the American Petroleum Institute (API) indicating a sharp rise in US crude stockpiles, which helped temper some of the geopolitical gains.
OPEC and IEA lower demand projections
In its monthly oil market report, OPEC trimmed its 2026 global oil demand growth forecast to 580,000 barrels per day (b/d), citing a weaker macroeconomic backdrop and efficiency gains. The IEA followed suit, revising its 2026 demand outlook down by 510,000 b/d, now projecting a contraction of 1.6 million b/d for the year.
The IEA also expects global supply to fall by 4.3 million b/d in 2026, resulting in a supply deficit of roughly 1.27 million b/d. According to BNY, the agency's report indicates a market that became increasingly constrained during July, with geopolitical disruptions continuing to hamper global energy flows.
BNY noted that the IEA's downgrade reflects the prolonged closure of the Strait of Hormuz and elevated oil prices, which are weighing on consumption. The agency's revised figures underscore the delicate balance between supply risks and demand weakness.
US inventory build adds to bearish signals
Preliminary API data showed US crude inventories rose sharply last week, a build that, if confirmed by the Energy Information Administration (EIA) later on Wednesday, could ease concerns about supply tightness. Analysts at Haitong Futures suggested that a confirmed build might help calm the market, though they cautioned that the geopolitical situation remains fluid.
Hormuz and Bab el-Mandeb disruptions persist
Oil prices initially moved higher after a senior Iranian source told Reuters that no talks were underway with the United States to extend a ceasefire, as Tehran considers the agreement to have had no official start date. Meanwhile, separate attacks on commercial shipping were reported in both the Strait of Hormuz and the Bab el-Mandeb Strait, two critical chokepoints for Middle Eastern oil and gas exports.
Shipping activity through the Strait of Hormuz remained far below historical norms, with only eight vessels transiting the waterway on Tuesday, compared with 125 to 140 per day before the conflict began. The continued disruption to maritime traffic has kept supply risks elevated, even as demand forecasts weaken.
Given the high level of uncertainty, retail interest in oil trading—often through CFD brokers—is likely to remain strong.
IEA sees tighter inventories despite higher output
The IEA reported that global oil supply rose to 101.5 million b/d in July, but noted that output remained below year-earlier levels as Gulf production continued to be disrupted. Refinery crude throughputs increased to 80.9 million b/d in July, yet stayed nearly 5 million b/d below last year's levels, with further reductions expected in the third quarter.
Despite the higher production, the IEA said observed inventories fell by 69 million barrels in July, while crude prices climbed sharply amid backwardation and tighter refined product markets. This suggests that the market remains vulnerable to supply shocks, even as demand growth slows.
For investors, the mixed signals from the oil market come amid broader shifts in energy and tech sectors. For instance, BP and Shell led the FTSE 100 on Tuesday as crude jumped on Iran war risks, while US inflation cooled in July as energy prices fell, easing pressure on the Federal Reserve. Meanwhile, Marvell stock has dipped 35% from its peak, with earnings and AI demand in focus.
This article is for informational purposes only and does not constitute financial advice.
