Oil dropped 2% as massive US crude build and demand downgrades override Hormuz impasse

Global crude benchmarks fell more than 2% on Thursday, snapping a multi-session rally as a massive surge in US crude inventories and downgraded global demand forecasts overshadowed ongoing Middle Eastern supply disruptions.

International Brent crude settled down $1.91, or 2.15%, at $87.07 a barrel, halting a six-session winning streak.

US West Texas Intermediate (WTI) dropped $2.02, or 2.40%, to finish at $81.25 a barrel, ending five consecutive days of gains.

Downward momentum was driven by US Energy Information Administration data revealing a sharp 17.4 million barrel surge in commercial crude stockpiles to 424.4 million barrels for the week ended 7 August—the largest weekly accumulation since January 2023—triggered by slumping US exports.

Bearish sentiment was compounded by OPEC trimming its 2026 demand growth forecast to 580,000 barrels per day (bpd), alongside International Energy Agency projections of a 1.6 million bpd global consumption contraction amid soaring prices and refinery feedstock shortages.

Downside losses were capped late in the session following a Houthi drone attack on Saudi Aramco’s Jazan refinery, which drove diesel crack spreads to record highs. Physical market tightness remained anchored by maritime paralysis in the Strait of Hormuz, where daily vessel transits dropped to a three-week low of five ships—down from a pre-conflict baseline of 125 to 140—amid competing control claims from Washington and Tehran.

Further supply constraints persisted in Eastern Europe following a forced six-month shutdown at Russia's drone-damaged Orsk refinery.

Written by: Aiman Haikal