Two forces pulling prices down at once
WTI crude fell 3.25% to $101.76 per barrel on Thursday. Brent dropped 1.63% to $108.63. Oil is getting hit from both sides: fresh signals that an Iran deal might still be alive, and hard evidence that high prices are destroying demand faster than anyone expected.
Iran sent its answer
Iran delivered a written reply to Washington's latest proposed changes to a peace framework, passing the message through Pakistan's diplomatic back channel, Axios reported. The exchange is the first substantive contact between the two sides since Trump walked away from talks last week.
Separately, the White House sidestepped the May 1 War Powers Resolution deadline by declaring that the April 7 ceasefire means "hostilities have terminated." The Senate had already rejected a War Powers resolution six times. With the legal clock neutralized, the administration can keep the blockade running without congressional authorization, but the diplomatic channel stays open.
Traders read the combination as slightly bearish for prices. If talks gain traction, Iran's standing offer to reopen Hormuz in exchange for lifting the blockade could put millions of barrels back on the water.
Demand is cracking
The other half of the sell-off is structural. The IEA slashed its 2026 demand forecast from growth of 730,000 barrels per day to a contraction of 80,000 bpd. That would be the first annual decline since the pandemic. Second-quarter demand alone is projected to fall by 1.5 million bpd, the deepest quarterly drop since COVID lockdowns.
Brent peaked near $144 in early April. Prices have dropped roughly 25% since then, but the behavioral shifts triggered by $100-plus crude are still accelerating. Governments across Asia and Europe are stepping in with fuel-saving measures. The Philippines and Vietnam rolled out four-day workweeks and remote-work policies to keep cars off the road. Denmark told drivers to skip trips they don't need to make. Airlines from AirAsia X to Air New Zealand are slashing routes and raising fares.
March EV sales offered another data point: 1.75 million electric vehicles sold globally, up 66% from February.
UAE adds a wild card
On top of all this, the UAE officially left OPEC today after nearly 60 years. Abu Dhabi's production capacity sits near 4.85 million bpd, well above its old OPEC quota of 3.2 million bpd. How fast the UAE ramps will shape the supply picture for the rest of the year.
The tug of war
Oil is caught between two competing stories. The Hormuz closure and 9.1 million bpd of shut-in production still keep a floor under prices. But demand destruction and nascent peace talks are chipping away at the ceiling. Thursday's session suggests the ceiling is winning.