Summary
Oil prices moved slightly higher on Thursday as traders prepared for a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later in the day, with market attention also fixed on the situation in Iran. Brent crude rose to $105.76 a barrel and U.S. West Texas Intermediate reached $101.14 by 0015 GMT, while analysts and market participants noted recent downside pressure from concerns about U.S. interest rates.
BEIJING, May 14 - Oil markets were marginally firmer on Thursday as investors awaited a scheduled meeting between President Trump and President Xi in Beijing, and as geopolitical developments in the Middle East continued to influence risk assessments.
By 0015 GMT, Brent crude futures were up 13 cents, or 0.12%, at $105.76 a barrel, while U.S. West Texas Intermediate futures were higher by 12 cents, or 0.12%, at $101.14. The two benchmarks had retreated on Wednesday amid heightened investor concern about the possibility of further U.S. interest rate increases - Brent fell by more than $2 a barrel and WTI slid by more than $1 during that session.
President Trump arrived in Beijing on Wednesday evening and was due to engage in a series of meetings with President Xi. The agenda for the visits includes efforts to secure economic outcomes, sustain a fragile trade truce, and manage contentious issues such as the war in Iran and arms sales to Taiwan. While the president has stated he did not expect to need China’s assistance to end the Iran war, he was nonetheless expected to seek Xi’s help in addressing the costly conflict.
Market observers and analysts suggested that the president was unlikely to obtain the level of backing he sought from China. In a note, IG analyst Tony Sycamore warned, "Failure to make meaningful progress on reopening the strait could leave the US with few options other than renewed military action."
At the same time, Iran appears to have strengthened its control over the Strait of Hormuz, and has made arrangements with Iraq and Pakistan to move oil and liquefied natural gas from the region. China remains the largest buyer of Iranian crude despite pressure from U.S. sanctions. More than 80% of Iran’s shipped oil was destined for China in 2025, according to the information reported, as Chinese independent refiners sought discounted U.S.-sanctioned crude.
Market implications
- Prices were modestly higher in early European trading, reflecting cautious positioning ahead of the high-level U.S.-China discussions.
- Recent volatility was linked to investor concerns about potential U.S. interest rate hikes, which prompted declines in both Brent and WTI the previous session.
- Geopolitical developments in the Strait of Hormuz and China’s role as a major buyer of Iranian oil remain key factors for supply risk considerations.