Oil edges up as investors focus on Trump-Xi meeting in Beijing

Oil prices experienced a slight uptick on Friday, with Brent crude futures rising 45 cents to $106.08 per barrel and US West Texas Intermediate futures increasing 41 cents to $101.43. The market reaction followed the start of a high-stakes summit in Beijing between US President Donald Trump and Chinese President Xi Jinping, where discussions on Iran’s conflict and its impact on global oil supply took center stage. Investors are closely watching whether the meeting will yield progress toward resolving the Iran war, which has disrupted oil flows through the Strait of Hormuz—a critical energy chokepoint. Xi warned Trump that disagreements over Taiwan could strain relations, while Trump framed the summit as a potential turning point. Analysts at ING noted that oil prices remain in a ‘wait-and-see mode,’ with expectations for meaningful results on Iran being cautiously optimistic. The Strait of Hormuz has been largely closed since the conflict escalated in late February, forcing traders to seek alternative routes. A Chinese supertanker carrying 2 million barrels of Iraqi crude recently became the third vessel to exit the strait since the war began, highlighting the limited progress in restoring normal oil transit. Iran has reportedly strengthened control over the strait by negotiating oil shipment deals with Iraq and Pakistan. The International Energy Agency (IEA) warned that global oil supply will fall short of demand this year due to the war’s disruption of Middle East production and rapid inventory depletion. Earlier projections had anticipated a surplus, but the conflict has reversed that outlook, exacerbating supply constraints. Trump is expected to urge China to pressure Iran into a deal with Washington to end the conflict, though analysts doubt Xi will exert significant influence over China’s long-standing strategic partner. Failure to reopen the Strait of Hormuz could leave the US with limited options beyond potential military intervention, according to IG analyst Tony Sycamore. Yesterday’s oil prices declined amid concerns over possible US interest rate hikes, which could further strain inflation already fueled by elevated fuel costs. Brent crude dropped over $2 per barrel, while WTI futures fell more than $1, reflecting investor unease over economic policy shifts.