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Correction: EMEA Oil Update: Brent Crude Slips After Early Gains as IEA, OPEC Lower Demand Forecasts

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(Corrects 3rd paragraph to clarify OPEC forecasts were released on Wednesday)

EMEA crude futures gave up early gains on Wednesday after the International Energy Agency and the Organization of the Petroleum Exporting Countries lowered their forecasts for global oil demand growth in 2026, while Pakistan said it was working to bring the US and Iran to the negotiating table.

Brent crude futures slipped 0.4% to $88.56 after gaining almost 1% earlier in the day, while Murban crude futures were up 0.44% at $89.49/bbl.

The Organization of the Petroleum Exporting Countries on Wednesday lowered its global oil demand growth forecasts for 2026 for the fourth straight month, projecting 600,000 barrels per day higher consumption this year than last.

That was a sharp reduction than its forecast for an extra 800,000 bbl/d given in July, already down from 1 million bbl/d in June, 1.2 mmbbl/d in May, and 1.4 mmbbl/d in April.

In 2027, global demand is projected to grow by about 2.2 mmbbl/d, year over year, up from forecasts of 1.9 mmbbl/d in July, OPEC said in its Monthly Oil Market Report.

The IEA's forecast differed markedly, foreseeing a 1.6 mmbbl/d drop in demand in 2026, but that was 510,000 bbl/d more than its projection in July. Oil consumption will suffer from ongoing disruption to flows through the crucial Strait of Hormuz waterway and elevated fuel prices.

World demand is, however, projected to rise by 2.4 million mmbbl/d in 2027, with annual contractions expected to ease from 4.9 mmbbl/d in Q2 to 2.8 mmbbl/d in Q3, and return to growth in Q4.

"Oil remains trapped between geopolitical risk and expectations that an eventual reopening of the Strait of Hormuz will release shut-in Gulf production, keeping price volatility elevated," Saxo Bank's Ole Hansen said in a note on Wednesday.

"The IEA and EIA both highlight rapidly depleted inventories, but demand destruction, weak Chinese crude imports and expectations of eventual supply normalisation help explain why crude is not trading materially higher," Hansen said.

Pakistan Foreign Ministry spokesperson Tahir Andrabi on Wednesday said the country was working to bring the US and Iran to the negotiating table to restore the ceasefire and resolve disputes over the Strait of Hormuz.

Iran has not held talks with the US to extend the ceasefire because Tehran viewed the June deal as having no official start date, Reuters reported Wednesday, citing a senior Iranian source. That came after a Turkish media report that said the foes have agreed to extend a 60-day ceasefire under their interim deal signed in June.

On Tuesday, Pakistan's Defense Minister Khawaja Asif reportedly said that the US and Iran are "close to some sort of arrangement" on the Strait.

Talks between Oman and Iran over shipping routes in the strategic waterway are said to have also reached an advanced stage.

However, Iran reportedly said it would keep the crucial waterway closed until the US lifts the blockade on its ports and compensates it for damage caused during the conflict.

US President Donald Trump on Tuesday, according to media reports, said that the US had "total control" of the Hormuz waterway, which accounts for 20% of the global energy flows.

Trump further said that he did not trust Iran, accusing it of repeatedly lying to him, and warned that the country would be "blown away" if it challenged the US.

"By this point, you'd think markets would be largely immune to headlines about a US-Iran deal. The pattern keeps repeating - initial enthusiasm when negotiations appear promising, only for that optimism to dissipate just as quickly. Yet the oil market remains very headline-driven, which leaves prices whipsawing," research firm ING said in a note on Tuesday.

"The latest bout of optimism is quickly fading.... Current rhetoric suggests any potential deal is still some way off, meaning risks remain skewed to the upside for oil prices," it added.

Meanwhile, Middle East tensions kept traders cautious after a US Navy helicopter fired missiles at a Panama-flagged cargo ship in the Gulf of Oman and a drone targeted a refinery in Libya, Daniel Hynes, a senior commodity strategist at ANZ, said in a note.

The number of vessels passing through the Strait of Hormuz fell to a one-week low of eight on Tuesday as shipowners avoided the key route amid ongoing Middle East tensions, Reuters reported on Wednesday, citing Kpler data.

"The collapse of the US-Iran peace deal has seen oil flows from the Persian Gulf once again dry up. The Strait of Hormuz remains heavily constrained, with vessel traffic showing no meaningful recovery," Hynes said.

The US Energy Information Administration expects Brent crude prices to remain elevated through 2026 as disruption in the Strait of Hormuz weighs on global oil flows and inventories, according to its August Short-Term Energy Outlook on Tuesday.

The EIA expects Brent to average about $85/bbl in Q3 2026, $11/bbl above its previous forecast, before declining to $78/bbl in Q4 2026 as oil flows recover.

Global oil inventories fell by an average of 4.2 million b/d in Q2 2026, and the EIA expects inventories to decline by another 3.8 million b/d on average in Q3 2026.

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