Oil Prices Drift as IEA Warns of Volatility and OPEC Trims Demand View

CNBC reported Thursday that oil prices struggled for direction as traders absorbed a reduced demand forecast from OPEC and a stark warning from the International Energy Agency about oil prices volatility in the months ahead.

Brent crude for July delivery slipped about 0.2% to $105.42 per barrel in early trading. U.S. West Texas Intermediate for June edged down 0.16% to $100.87. Both contracts opened slightly higher before fading.

OPEC Trims Its 2026 Demand Growth Estimate

OPEC lowered its projection for global oil demand growth this year to roughly 1.2 million barrels per day. That figure compares to a prior estimate of 1.4 million bpd. The cartel’s own production fell by 1.7 million bpd in April alone. Since the Iran war began in late February, output from OPEC members has dropped by more than 30%, equivalent to nearly 9.7 million bpd. The latest monthly report is also expected to be the final one incorporating data from the United Arab Emirates, which formally left the cartel on May 1.

Hormuz Disruption Draws Down Global Stocks at Record Rate

The IEA’s assessment, published Wednesday, painted a worrying picture of supply-side stress. The agency said global oil inventories are being depleted at a record pace due to mounting losses from the Strait of Hormuz. Cumulative supply cuts from Gulf producers have now exceeded 14 million bpd, pushing the total barrel loss past one billion. The agency cautioned that greater price swings are likely as peak summer demand approaches.

Analysts at ING echoed that caution. How long elevated prices persist depends heavily on developments around the Hormuz closure and the risk of further damage to energy infrastructure across the region, the bank noted.

Background: A Market Already Under Strain Before the Iran War

Before the late-February outbreak of hostilities, global oil markets were navigating a fragile balance between softening Chinese demand and measured OPEC output discipline. The conflict has since fundamentally altered that calculus. With the Strait of Hormuz serving as the passage for a significant share of seaborne crude, any prolonged closure forces buyers to seek costlier alternatives and longer shipping routes. Both Brent and WTI have climbed sharply since the war began, placing inflationary pressure on import-dependent economies worldwide.

Trump-Xi Meeting Adds a Diplomatic Wild Card

Traders are also watching a planned meeting between U.S. President Donald Trump and Chinese President Xi Jinping. Former U.S. Commerce Secretary Carlos Gutierrez told CNBC’s Squawk Box Asia that Beijing has strong incentives to push for a ceasefire. China is the single largest buyer of oil moving through Hormuz, Gutierrez noted, meaning Xi has as much interest in ending the conflict as Trump does. Any diplomatic signal from that summit could move prices quickly.

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