Oil Steady, Market Monitors Ceasefire and Trump-Xi Summit
Oil prices were relatively stable on Wednesday as the market monitored the fragile ceasefire in the Middle East and awaited the summit in Beijing between U.S. President Donald Trump and Chinese President Xi Jinping. Brent edged down 14 cents (0.1%) to $107.63/barrel at 1328 GMT, while WTI rose 44 cents (0.4%) to $102.62/barrel.
Both benchmarks have held around or above $100/barrel since the U.S.-Israel war with Iran began in late February, after Tehran effectively closed the Strait of Hormuz. Market sensitivity remains high to any updates from the region, as any new escalation or threat to supply flows could trigger volatility and revive upward momentum.
From a fundamental perspective, the International Energy Agency (IEA) assesses that global oil supply will not meet total demand this year due to production disruptions in the Middle East. The IEA also highlighted a significant inventory decline in the past two months, while Russian oil production reportedly fell 460,000 bpd in April (year-on-year) to around 8.8 million bpd amid increased Ukrainian drone attacks on energy targets.
Geopolitical focus intensified after prices surged more than 3% on Tuesday as hopes for a lasting US-Iran ceasefire faded, diminishing the chances of reopening Hormuz. Trump arrived in Beijing on Wednesday and stated he did not need China's help to end the war, even though China is the largest buyer of Iranian oil. The market now awaits the outcome of the Trump-Xi meeting on Thursday-Friday, amid expectations that structural supply tightening could persist for at least the rest of the year.
On the macro front, rising energy prices are beginning to be seen as weighing on the US economy through fuel costs and potential knock-on effects on inflation, reinforcing expectations that high interest rates will persist for longer and could curb oil demand. Market participants are also awaiting official US inventory data due Wednesday, after market sources citing the API reported that crude oil stocks fell for a fourth straight week and distillate stocks also fell.
Source: newsmaker.id
