Global oil markets experienced significant downward pressure on Thursday following a sobering demand forecast revision from the International Energy Agency. The Paris-based organization substantially lowered its 2026 global oil consumption projections, triggering a swift market reaction that erased earlier geopolitical risk premiums.
Benchmark crude indices registered pronounced declines throughout the trading session. Brent crude futures plummeted by $1.26, representing a 1.82% decrease to settle at $68.14 per barrel. Simultaneously, US West Texas Intermediate crude witnessed a $1.24 drop, equating to a 1.92% decline, closing at $63.39 per barrel.
The IEA’s monthly market report indicated that demand growth would underperform previous estimates despite January supply disruptions. The agency projected a substantial market surplus would persist throughout the year, fundamentally altering trader sentiment. This revision prompted investors to reassess the balance between geopolitical tensions and fundamental supply-demand dynamics.
Market analysts observed that the earlier price support derived from US-Iran tensions had rapidly dissipated. Phil Flynn, senior analyst at Price Futures Group, noted that the market ‘just ran out of steam’ as participants prioritized the weakened demand outlook over Middle Eastern geopolitical concerns.
Concurrently, substantial US inventory data exacerbated the bearish sentiment. The Energy Information Administration reported an 8.5 million barrel crude stockpile increase, dramatically exceeding analyst expectations of a 793,000-barrel build. Refinery utilization rates concurrently declined by 1.1 percentage points to 89.4%, indicating reduced processing demand.
On the supply front, Russian seaborne oil product exports climbed 0.7% month-over-month to 9.12 million metric tons in January, driven by elevated fuel production and seasonal domestic consumption patterns. This additional supply further contributed to the global surplus scenario outlined by the IEA.