Oil Rises as Trump-Xi Meeting Approaches in Beijing

• Brent crude rose 13 cents to $105.76 per barrel while WTI increased 12 cents to $101.14, recovering from Wednesday's losses of over $2 and $1 respectively
• Iran has tightened control over the Strait of Hormuz, cutting deals with Iraq and Pakistan to ship oil and LNG, raising concerns about potential U.S. military action if diplomatic progress fails
• China remains the biggest buyer of Iranian oil despite U.S. sanctions, with over 80% of Iranian oil exports destined for China in 2025 as refiners capitalize on discounted sanctioned crude

Oil Rises as Trump-Xi Meeting Approaches in Beijing

Market Movement:

Oil prices edged higher Thursday as investors monitored a high-stakes meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing. Brent crude futures rose 0.12% to $105.76 per barrel, while WTI futures climbed 0.12% to $101.14 by 0015 GMT. This follows Wednesday's decline of over $2 per barrel for Brent and more than $1 for WTI amid concerns over potential U.S. interest rate hikes.

Key Geopolitical Factors:

The Trump-Xi summit focuses on maintaining a fragile trade truce and addressing the Iran war, which is significantly impacting oil markets. Trump is seeking China's assistance in resolving the costly conflict, though analysts remain skeptical about securing meaningful support. Iran has tightened control over the Strait of Hormuz, establishing shipping agreements with Iraq and Pakistan for oil and LNG exports from the region.

China-Iran Oil Trade:

China remains the largest buyer of Iranian oil despite U.S. sanctions, with more than 80% of Iranian oil exports destined for China in 2025. Chinese independent refiners continue capitalizing on discounted U.S.-sanctioned Iranian crude.

Market Implications:

Analysts warn that failure to achieve progress on reopening the strait could force the U.S. toward renewed military action, creating additional supply disruption risks. The Iran situation poses significant supply concerns given the Strait of Hormuz's critical role in global energy transportation. The outcome of the Trump-Xi meeting could prove pivotal for oil market stability and geopolitical tensions in the Middle East.