US-Iran war: Oil prices declined by more than $1 a barrel on Thursday after analysts cut their forecasts for global oil demand in 2026, citing disruptions caused by the US-Israeli conflict with Iran. However, concerns over supply disruptions stemming from the conflict continued to limit the downside in prices.
Brent crude futures had fallen $1.29, or 1.5%, to $87.69 a barrel, while US West Texas Intermediate (WTI) crude declined $1.30, or 1.6%, to $81.97 a barrel.
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On the diplomatic front, there was little indication of progress toward reopening the waterway, with US President Donald Trump claiming that Washington has “total control” over the strategic conduit.
Negotiations between the US and Iran appear to have reached an impasse as both sides maintain firm positions. Washington continues to blockade Iranian ports as part of efforts to intensify economic pressure on Tehran. Pakistan, which has been playing a mediating role, said the broader peace process had stalled, though the deadline for a US-Iran memorandum of understanding could still be extended.
Crude oil prices are on track for a weekly gain following months of heightened volatility, as traders monitor intermittent efforts by Tehran and Washington to resolve their conflict. The Middle East war, along with the ongoing Russia-Ukraine conflict and repeated attacks on energy infrastructure, including ports and refineries, has further tightened global oil and refined-product markets.
According to the International Energy Agency, the global oil market is expected to face a supply shortfall of 1.8 million barrels per day this quarter as the US-Iran conflict continues. The projected deficit is more than twice the agency’s earlier estimate. For 2026 as a whole, the IEA expects the shortfall to be the largest in five years, according to its report released on Wednesday.
An Iranian senior official was quoted as saying by Reuters on Wednesday that negotiations to revive the interim agreement reached in June had made no headway, with the two sides yet to establish a timeline for its implementation.
Meanwhile, attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday have underscored the risks to crude supplies from the Middle East, given the two waterways’ importance as major export routes for the region’s oil and gas.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
