Oil Price Today (August 13): Crude oil dips below $90 despite Strait of Hormuz deadlock. Here’s why

Oil prices fell by more than $1 on Thursday after major forecasters lowered their projections for global oil demand in 2026, citing disruptions caused by the U.S.-Israeli war on Iran. However, supply concerns arising from the conflict continued to provide some support to prices.

Brent futures were down $1.29, or 1.5%, at $87.69 a barrel. U.S. West Texas Intermediate (WTI) crude fell $1.20, or 1.2%, to $82.

The Organisation of Petroleum Exporting Countries cut its forecast for global oil demand growth in 2026 to 580,000 barrels per day in its monthly oil market report released on Wednesday. The International Energy Agency also lowered its outlook on Wednesday, saying it now expects oil consumption to contract by 1.6 million barrels per day this year, compared with its previous forecast of a 1 million bpd decline.


Also read: Global oil supply shortfall to deepen as Hormuz reopening remains elusive, IEA says

The agency attributed the sharper contraction to restricted fuel supplies and higher prices resulting from the U.S.-Israeli war on Iran, which has weighed on demand.

Oil prices also came under pressure after U.S. commercial crude inventories recorded an unexpected increase. The Energy Information Administration said on Wednesday that inventories posted their biggest weekly rise since January 2023 last week, as exports declined.

Iran war tensions remain

Despite the decline in prices, stalled talks between Iran and the U.S. to end the war in the Gulf have kept the market elevated. US President Donald Trump said the US had "total control" over the strait, while talks between Washington and Tehran appeared deadlocked, with both sides hardening their positions.

The US pressed ahead with a blockade of Iranian ports as part of a wider push to increase economic pressure on the country. Pakistan, which has mediated between the two countries, said the broader peace process had stalled, though it added that the deadline for a US-Iran memorandum of understanding could still be extended, according to a Bloomberg report.

The risks to regional crude supplies also remain evident after attacks on shipping in the Strait of Hormuz and the Bab el-Mandeb Strait on Tuesday. Both are critical export routes for Middle Eastern oil and gas.

The UAE's ADNOC said on Friday that 15 of its vessels had been attacked while passing through the Strait of Hormuz since the conflict began.

The situation around both Hormuz and Bab el-Mandeb remains a key risk for oil markets. Even temporary restrictions, or the threat of further attacks, are raising insurance costs and prompting ships to use longer routes. This is expected to keep energy flows under pressure in the near term.

What are experts saying?

The duration of the disruption will be critical for the outlook on crude prices. JPMorgan estimates that every additional month of disruption could push Brent up by about $7 to $8 a barrel. If the disruption lasts three months, the bank expects average monthly Brent prices to reach around $114 a barrel.

Goldman Sachs has similarly warned that Brent could rise to $120 a barrel if shipping disruptions through the Strait of Hormuz, the world's most important oil transit route, continue.

Read more: Iran's Supreme Leader Khamenei fills 6 key military positions

However, Goldman Sachs expects the Middle East tensions to eventually ease in its base case. It sees Brent averaging $80 a barrel in the fourth quarter and $75 a barrel next year. At the same time, it said risks remain tilted to the upside because disruptions through Hormuz and the Red Sea could last longer than expected.

"The direction of our outlook is unchanged; the path and the timeline have shifted. We still expect oil to cool as we move into 2027, for three reasons: supply outside the conflict zone is expanding, with OPEC+ raising production targets, the UAE at record output and non-OPEC barrels responding to price," said Anindya Banerjee, Head of Commodity Research at Kotak Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)