Oil prices fell sharply on Thursday, August 13, 2026, driven by reduced global demand projections for the year despite ongoing tensions in the Middle East. Brent crude futures dropped by Ksh166.75, or 1.5%, settling at Ksh11,333.89 per barrel, while US West Texas Intermediate (WTI) crude declined by Ksh68.03, or 1.6%, to Ksh10,598.43 per barrel.
The Organisation of Petroleum Exporting Countries (OPEC) revised its 2026 world oil demand growth forecast downward to 580,000 barrels per day, as revealed in its latest monthly market report. Similarly, the International Energy Agency (IEA) now anticipates a contraction of 1.6 million barrels per day in oil consumption this year, a sharper decline than the 1 million barrels per day forecast from the previous month. This adjustment reflects the impact of restricted fuel supplies and elevated prices stemming from the US-Israeli conflict involving Iran, which have dampened demand.
Adding pressure to prices was a surprising increase in US commercial crude inventories. According to the Energy Information Administration (EIA), inventories rose by 17.4 million barrels in the week ending August 7, reaching 424.4 million barrels—the highest since early June 2026. This gain was significantly above analysts’ expectations of a 1.4 million-barrel draw, attributed to a slump in exports.
Despite these downward pressures, oil prices remain supported by geopolitical risks. Talks between the US and Iran aimed at reviving the interim agreement reached in June have stalled, with no progress reported on setting a timeline for implementation. Meanwhile, recent attacks on shipping vessels in the Strait of Hormuz and Bab el-Mandeb Strait, two vital oil export routes in the Middle East, have heightened supply concerns.
Analysts from Haitong Futures noted that the security situation in these waters has worsened, forcing ships to disable tracking signals. This reduces transparency in maritime navigation and complicates efforts to monitor actual crude supply levels, sustaining a risk premium on oil prices.
