Oil Prices Correct, Hormuz and Summit in Focus
Oil prices weakened in volatile trading on Wednesday (May 13), as market participants held positions ahead of a crucial meeting between US President Donald Trump and Chinese President Xi Jinping. The June WTI contract fell 1.1% to close at US$101.02 per barrel, snapping a three-session rally, while the July Brent contract fell 2% to close at US$105.63 per barrel.
The decline was also triggered by the release of US inventory data that eased concerns about a short-term supply tightening. Distillate stocks rose 190,000 barrels, the first increase since March, while crude stocks fell 4.3 million barrels—nearly double the projection of a widely followed industry group. Positioning-wise, the market was seen as reluctant to increase risk in either direction ahead of the Trump-Xi summit, and hesitant to pursue a rally above US$100, as changes in rhetoric often trigger spikes in volatility.
Despite the corrective session, geopolitical risks remained a dominant factor. Middle East conflicts disrupted energy flows, with refineries in several Asian countries seeking alternative supplies. The Strait of Hormuz has been effectively closed since the outbreak of war in late February, coupled with a US naval blockade of Iranian ports, which has prolonged disruptions to oil, natural gas, and fuel shipments.
Supply fundamentals also remain tight. The IEA said global oil inventories fell by about 4 million barrels per day in March and April, while Saudi Arabia told OPEC that its production fell to its lowest level since 1990. However, market strength indicators are not entirely unidirectional: tightening signals have weakened in recent sessions as refineries cut purchases, in line with a market that is more sensitive to inventory data.
Inflation channels remain a key consideration, as the Iran war has pushed up energy costs and US gasoline prices to their highest levels since 2022, adding to domestic political pressure on Trump ahead of the November midterm elections. On the supply side, shipments from Iran's main export terminal have reportedly stalled in recent days, and Vietnam has also asked the US to allow a supertanker to bypass the blockade—the vessel briefly passed through Hormuz but turned back on Monday near the blockade's perimeter.
Market participants are now monitoring the Trump-Xi outcome (particularly trade signals and China's position as a major buyer of Iranian oil), developments on the status of Hormuz and the blockade, and subsequent US stockpile data to assess whether the correction is merely a pause in volatility or the beginning of a trend adjustment above US$100. (arl)*
Source: Newsmaker.id
