Oil prices fell sharply on Thursday, reversing earlier gains as data and forecasts pointed to weaker demand and expectations of rising supply. Brent crude settled at $67.52 a barrel, down $1.88 or about 2.7%, while U.S. West Texas Intermediate finished at $62.84, down about $1.79 or 2.8%.
The drop came after the International Energy Agency (IEA) released its monthly oil market report, saying global oil demand will grow more slowly than previously expected this year and that a sizeable surplus is likely to persist despite supply outages that trimmed output in January.
Prices initially found support from lingering Middle East geopolitical concerns, but the tightening of conflict fears — including signs that U.S.–Iran tensions may not escalate further — helped calm some risk premiums. Israeli Prime Minister Benjamin Netanyahu suggested diplomatic efforts with Iran are continuing, reducing near-term conflict risk.
In the United States, a large build in crude inventories also pressured markets. Government data showed inventories rose far more than analysts had expected, pointing to abundant supplies even as some domestic production challenges ease.
Beyond short-term factors, major energy agencies and analysts continue to forecast a broad oil market surplus in 2026, as supply growth outpaces demand. The IEA — and other long-range data analyses — project world oil inventories will keep building through next year, even with periodic disruptions.