On Thursday, May 14, global oil prices showed an increase in anticipation of the meeting between U.S. President Donald Trump and Chinese leader Xi Jinping. Investors are closely monitoring this event, as the negotiations could impact the ongoing conflict between the U.S. and Iran, which has already significantly disrupted global energy supplies.
This is reported by Finway
Oil Price Dynamics and Geopolitical Impact
In morning trading, Brent crude futures rose by 26 cents (0.25%), reaching $105.89 per barrel. Meanwhile, U.S. oil West Texas Intermediate (WTI) increased by 32 cents (0.32%) to $101.34 per barrel. This followed a significant decline the day before, when prices for both key benchmarks fell due to investors’ concerns over a potential increase in interest rates in the U.S., which could exacerbate inflationary pressures. Brent had dropped by more than $2 per barrel, while WTI fell by over $1.
The Trump-Xi meeting draws attention not only due to trade issues but also in connection with the war between the U.S. and Iran. It is expected that the U.S. President will ask China to influence Tehran to reach agreements that would help reduce tensions. However, experts doubt China’s willingness to pressure its strategic ally.
Energy Market and New Geostrategic Realities
Negotiators also plan to discuss the unstable trade truce, the situation surrounding Iran, and the sale of U.S. weapons to Taiwan. Analysts from the financial group ING noted in their report that “oil prices are in a wait-and-see mode,” emphasizing that the market may be placing excessive hopes on a positive outcome from the U.S.-China negotiations regarding the Iranian issue.
“Oil prices are in a wait-and-see mode,” analysts from the financial group ING stated in their report on Thursday, adding that the market may be placing too much hope on positive outcomes from the U.S.-China negotiations regarding Iran.
Despite Trump’s statements that China’s assistance is not critically necessary to end the war, it is expected that he will still raise this issue in conversation with Xi. If no progress is made in opening the Strait of Hormuz, the United States may be left with limited options other than resuming military operations, according to IG analyst Tony Sycamore.
Meanwhile, Iran has intensified its control over the Strait of Hormuz, signing new agreements with Iraq and Pakistan regarding the supply of oil and liquefied natural gas. On Wednesday, a Chinese supertanker carrying two million barrels of Iraqi crude oil was able to pass through the strait for the first time in over two months of blockade, becoming only the third vessel to leave the region since the war began.
According to the International Energy Agency (IEA), this year’s global oil supply volumes will remain below demand due to the war, which is damaging production in the Middle East and leading to record stock reductions. The agency has already revised its previous forecast regarding the oversupply in the market.
It should be noted that Donald Trump arrived in China on Wednesday, May 13, for a three-day state visit.