Brent and WTI crude prices fell despite reduced Strait of Hormuz vessel traffic, as demand concerns overshadow geopolitical tensions.
Oil prices declined more than 2% Thursday, with Brent settling at USD 87.07 and WTI at USD 81.25, despite vessel transits through the Strait of Hormuz dropping to a one-week low of eight ships. Traders are prioritizing demand destruction and rising non-Gulf supply over geopolitical risks, signaling a shift in market sentiment.
The International Energy Agency recently cut its 2026 global oil demand forecast, citing high prices and slowing economic growth. Earlier in the week, softer producer price data also contributed to reduced expectations for further Fed tightening, with markets now pricing a roughly one-third chance of a September rate hike.
Equities diverged from the energy sector, with the S&P 500 reaching record highs as investors largely dismissed rate uncertainty and oil volatility. The yen continued to weaken, nearing 160 against the USD despite recent intervention efforts by U.S. and Japanese authorities.