Oil prices edged higher on Wednesday as continued attacks on shipping in the Middle East and stalled negotiations to end the Iran conflict raised concerns over potential disruptions to crude supplies.
However, gains remained limited after major energy forecasters lowered their expectations for global oil demand growth in 2026.
Brent crude futures settled up 7 cents at $88.98 per barrel, while U.S. West Texas Intermediate (WTI) crude also gained 7 cents to close at $83.27 per barrel.
Shipping disruptions fuel supply concerns
Oil prices strengthened after a senior Iranian source told Reuters that there were no discussions between Iran and the United States to extend their ceasefire, arguing that Tehran viewed the agreement as having no official start date.
“The continued strength in oil prices comes as markets grow increasingly doubtful that an agreement can soon be reached to ease disruptions to crude flows from the region or prevent another escalation of the conflict,” said Simon-Peter Massabni, head of business development at brokerage XS.com.
The United States and Yemen’s Iran-aligned Houthis reported separate attacks on shipping routes in the Strait of Hormuz and the Bab el-Mandeb Strait, two critical pathways for Middle Eastern oil and gas exports as well as global trade through the Suez Canal.
Shipping data showed that vessel traffic through the Strait of Hormuz fell to a one-week low of eight ships on Tuesday. Before the conflict, approximately 125 to 140 vessels passed through the waterway each day.
OPEC and IEA lower oil demand forecasts
Oil futures faced downward pressure after energy organizations reduced their global demand projections for 2026.
The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for global oil demand growth in 2026 to 580,000 barrels per day in its latest monthly market report.
The International Energy Agency (IEA) also reduced its demand outlook and now expects oil demand to contract by 1.6 million barrels per day this year.
At the same time, the IEA forecast a larger decline in supply of approximately 4.3 million barrels per day, resulting in an estimated overall market deficit of around 1.27 million barrels per day in 2026.
Refiners adjust as Hormuz remains restricted
Simon Wong, portfolio manager at Gabelli, said the weaker demand outlook was expected as refiners, particularly in Asia, have struggled to secure sufficient crude supplies because of disruptions in the Strait of Hormuz.
Lower crude availability has forced some refiners to reduce operations, though the key question remains whether the decline represents temporary adjustments or a more permanent reduction in demand.
“The question is, after the war, how much of that demand will actually come back? I don’t think all of it will,” Wong said.
U.S. crude inventories increase
U.S. crude inventories unexpectedly increased last week, recording their largest weekly rise since January 2023, according to the Energy Information Administration.
Analysts said the inventory build was mainly driven by unusually weak crude exports combined with higher imports.
The increase in domestic stockpiles added some pressure to oil prices, partially offsetting concerns about geopolitical risks and supply disruptions.
