Crude oil prices declined on Thursday, with investors balancing concerns over weakening global demand against the persistent threat of supply disruptions in the Middle East.
By 4:39 AM Eastern Time, front-month Brent crude futures fell 1.4% to $87.66 per barrel, while US West Texas Intermediate (WTI) crude futures dropped 1.5% to $82 per barrel. This followed a period of upward movement in overnight trading.
The International Energy Agency (IEA) stated on Wednesday that the global demand for oil this year is likely to decline more than previously forecast, driven by the intensifying impact of the blockade on the Strait of Hormuz. The IEA noted that "renewed conflict and disrupted maritime shipping" are hampering global crude production growth, with July oil supply still down by 6.3 million barrels per day year-on-year.
Investor sentiment remains tense due to a series of deadly attacks on ships in the Gulf of Oman and the Red Sea. In addition, an oil spill off the coast of Oman is expanding in scope. According to a Reuters report, a sanctioned tanker ran aground on June 30, carrying approximately 800,000 barrels of Russian crude, causing a massive leak that has polluted the Omani coastline. The spill is near a nature reserve home to wildlife such as Arabian Sea humpback whales and Socotra cormorants.
These maritime attacks are further fueling concerns over potential supply interruptions. Despite diplomatic efforts to reopen the Strait of Hormuz, the conflict, now in its fifth month, continues to disrupt key energy transport routes.
Christopher Tahir, Senior Market Strategist at Exness, commented: "The crude oil market remains tight, and the outlook for the full reopening of the Strait of Hormuz is uncertain. This keeps the potential for upward price movement, and any further setbacks to the situation are likely to push prices higher."
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