TLDR
- Brent crude traded around $105–$106 a barrel after falling over 1% in the previous session
- Trump and Xi met in Beijing for over two hours, projecting an optimistic tone on US-China relations
- The Iran war has kept the Strait of Hormuz effectively closed, cutting roughly 6 million barrels a day in flows
- The IEA warned global oil markets will remain undersupplied through much of 2026 even if the conflict ends soon
- US crude stockpiles fell 4.3 million barrels last week, more than analysts expected
Oil prices held above $100 a barrel on Thursday as markets watched the opening day of a two-day summit between US President Donald Trump and Chinese leader Xi Jinping in Beijing.
Brent crude traded around $105 to $106 a barrel, while West Texas Intermediate hovered near $100 to $102. Both contracts had slipped more than 1% in the previous session but remained on track for sharp weekly gains.
Trump and Xi met for over two hours on Thursday. Trump told reporters the relationship between the two countries was going to be “better than ever before” and that they could have a “fantastic future together.” Chinese state media said Xi told Trump that stable US-China relations were critical for global stability.
Despite the positive tone, markets remained cautious. Traders were watching closely for any signals on the Iran conflict, which has been the main driver of elevated oil prices since hostilities began in late February.
"It's an honor to be with you, it's an honor to be your friend, and the relationship between China and the USA is going to be better than ever before." – President Donald J. Trump 🇺🇸 pic.twitter.com/WZkoGeVqhv
— The White House (@WhiteHouse) May 14, 2026
Iran War Keeps Oil Markets Tight
The conflict has sharply reduced oil flows through the Strait of Hormuz, a chokepoint through which roughly a fifth of global oil supply passes. Flows of crude and fuels through the strait fell by nearly 6 million barrels a day in the first quarter, according to the Energy Information Administration.
A ceasefire has been in place since early April, but flareups have continued and no peace agreement has been reached. The US and Iran have made little progress toward resolving their differences.
Iran’s main export terminal at Kharg Island has seen no tanker activity for four consecutive satellite observation periods, according to Bloomberg News. A US naval blockade of Iranian ports has further cut the country’s crude shipments.
The International Energy Agency warned this week that global oil markets will remain “severely undersupplied” through much of 2026, even if the conflict ends as early as next month.
OPEC cut its 2026 global oil demand growth forecast, pointing to the economic impact of the conflict and higher fuel prices, though it kept its broader economic growth projections in place.
US Stockpiles and Sanctions Add Pressure
US crude inventories fell by 4.3 million barrels last week, more than the 2 million barrel drop analysts had forecast. Gasoline stocks also dropped 4.1 million barrels, pointing to steady fuel demand despite high prices.
Ahead of the Beijing summit, the US sanctioned additional entities over Iranian oil sales to China, the largest buyer of Iranian crude. Trade talks were expected to take priority over Middle East discussions, according to Trump.
A sanctions waiver allowing purchases of Russian oil is set to expire this weekend. That leaves Indian refiners, among the biggest buyers of Russian crude, in a vulnerable position. India has imported large volumes of Russian oil so far this month.
ING analysts said the market was watching the Trump-Xi summit closely for any sign of progress on the Iran war. Trader Rebecca Babin of CIBC Private Wealth Group said markets remain focused on when oil flows will resume, even as that timeline keeps slipping.
Trump this week described a ceasefire as being on “massive life support,” dampening hopes for a quick resolution.
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