Oil Prices Ease as IEA Cuts Demand Outlook

Oil prices drifted lower on Friday, but the decline did little to change a week that still pointed to a steep advance for crude. Market sentiment remained tied to Middle East tensions and the risk that shipping routes could face further disruption, keeping traders focused on supply rather than just the day’s price move.

IEA deepens its demand cut

The International Energy Agency lowered its outlook for global oil consumption, saying demand is now likely to fall by 2.5 million barrels a day this year. That is a sharper contraction than the agency’s prior estimate of a 1.6 million barrel-a-day drop. The IEA also said world oil supply is expected to decline by 5.7 million barrels a day this year, underscoring the strain on the market from record fuel prices and weaker consumption.

Brent crude futures fell 2.7% to $104.68 a barrel, while West Texas Intermediate slipped 2% to $100.44. Even so, both benchmarks were still headed for a strong weekly finish, with Brent on course for its biggest weekly gain since July. That combination of a daily pullback and a firm weekly trend reflected a market that remains volatile and sensitive to supply headlines.

Shipping risks keep traders uneasy

Investors were also digesting reports that Iran and Oman had been meeting with Gulf states to discuss reopening shipping through the Strait of Hormuz. The Financial Times said Gulf foreign ministers are expected to meet their Iranian counterpart in Salalah on Monday to try to reach an arrangement on commercial traffic through the waterway. Any progress there would matter because Hormuz remains a critical chokepoint for global crude flows.

At the same time, military and security developments elsewhere in the region kept the market on edge. The Israeli military said it destroyed tunnels used by Hezbollah in southern Lebanon, while media reports said Yemen’s Houthis had taken a key island in the Red Sea near the Bab al-Mandab strait. That passage is vital to oil shipments, including exports from Saudi Arabia, so disruptions there can quickly feed into energy pricing.

For traders, the day’s lower settle was less important than the broader message: supply risks are still outweighing signs of softer demand. The price action showed how quickly crude can swing when geopolitical tension collides with shifting estimates for global consumption and output.

This article is not investment advice and recommends no asset, level or direction; a single session's move is not evidence of a trend. For background see Markets, Bear Market, BIST 100, and for terms the finance glossary.