An oil facility in Kuwait City [AFP]
An oil facility in Kuwait City [AFP]

Oil prices fell Thursday as forecasts pointed to a decline in global oil demand this year.

Brent crude futures for October delivery closed down 2.15 percent at $87.07 a barrel on the ICE Futures Exchange. West Texas Intermediate futures for September delivery settled at $81.25 a barrel on the New York Mercantile Exchange, down 2.43 percent from the previous session.

The decline appeared to be driven largely by the International Energy Agency's August oil market research note, released Thursday.

The IEA projected in the report that higher fuel prices resulting from shipping disruptions through the Strait of Hormuz could cut global oil demand by 1.6 million barrels per day this year — about 510,000 barrels more than its previous estimate.

Even before the United States and Iran signed a war-ending MOU in June, the sharp price spike seen in the early stages of the conflict had already eased somewhat, partly due to slowing crude imports by China. Analysts said the pattern of demand weakness capping upward price pressure could reassert itself.

However, ongoing instability in the Middle East has kept downward pressure on prices limited. Yemen's Iran-backed Houthi rebels claimed Thursday to have struck a Saudi Arabian oil facility with drones. Market experts warned that uncertainty surrounding the Strait of Hormuz remains elevated, and that any further shipping disruptions could push prices higher again.


kate01@heraldcorp.com