Crude Oil Slumps As Traders React To IEA's Demand Forecast For 2026

(RTTNews) - Crude oil prices tumbled on Thursday as the demand forecast by the International Energy Agency for 2026 indicating overwhelming supply prompted investors to sell.

WTI Crude Oil for March delivery was last seen trading down by $1.97 (or 3.05%) at $62.66 per barrel.

In its monthly oil report today, the Paris-based International Energy Agency projected that global oil supply would exceed demand by 3.73 million barrels per day in 2026 (equivalent to nearly 4% of global demand). These numbers are almost the same as their previous forecast.

Pointing to the escalation in geopolitical tensions, extreme cold in North America, and delayed output from Kazakhstan, the agency lowered its outlook for oil demand growth to 850,000 barrels per day, down from its previous forecast by 80,000 bpd.

Yesterday, the Organization of the Petroleum Exporting Countries had projected that crude oil demand from the OPEC+ alliance's output for the second-quarter 2026 will drop by 400,000 bpd.

Global demand for the cartel's crude is estimated to average 42.20 million bpd for the second-quarter 2026, down from 42.60 million bpd for the first-quarter 2026.

Eight OPEC+ member-nations are scheduled to meet on March 1 to decide on their output levels. Of note, the alliance has paused production hikes for first-quarter 2026.

OPEC's largest producer, Saudi Arabia's crude oil exports to China will reach a multi-year high in March as a consequence of price cuts instituted by the nation's oil company Aramco to attract more demand.

The geopolitical risk premium arising from the Middle East tensions continues to play out.

Last weekend's U.S.-Iran talks held in Muscat, Oman, to discuss Iran's nuclear plans ended inconclusively.

President Donald Trump stated that he may order a second aircraft carrier to the Persian Gulf if Iran delays the negotiations.

Reports surfaced hinting that the U.S. is also considering seizing oil tankers carrying Iran's crude oil.

Israel's Prime Minister Benjamin Netanyahu met Trump yesterday to persuade him to include Iran's ballistic missile program as well as Iran's support for Houthi and Hezbollah militant groups in the current U.S.-Iran talks.

Announcing that he wants negotiations to run their course for now, Trump also subtly threatened Iran not to forget last year's military operation (termed "Midnight Hammer") wherein the U.S. attacked three nuclear facilities in Iran in June 2025.

A Wall Street Journal report states that the Pentagon is preparing a second aircraft carrier to be deployed to the Middle East.

Experts count on the fact that neither Trump nor the current Iranian regime would prefer a military conflict to override diplomacy and hence a resolution would be reached sooner or later.

In Europe, the Russia-Ukraine war continues without any ceasefire.

Despite several rounds of discussions involving the U.S. and Ukraine as well as the U.S. with Russia and after two rounds of tripartite talks held in Abu Dhabi, territorial concessions remain the sticking point, blocking a peace deal.

Ukraine's President Volodymyr Zelenskyy claimed that Russia is preventing any new talks.

In the U.S., yesterday's nonfarm payrolls report suggested a robust job market and dampened investor expectations of an interest rate cut by the U.S. Federal Reserve in the near-term.

Today's data showed that the jobless claims for obtaining unemployment benefits fell by 5,000 to 227,000 for the week ending February 7.

The U.S. Dollar Index was last seen trading at 96.94, up by 0.11 points (0.11%).