Oil Prices Surge Above $105 as Trump-Xi Meeting Takes Center Stage for Strait of Hormuz Security.

Oil prices experienced a slight uptick on Thursday, reflecting investor sentiment as anticipation builds around impending discussions between U.S. President Donald Trump and Chinese President Xi Jinping. With Trump landing in Beijing on Wednesday evening, key geopolitical issues—including the ongoing conflict with Iran and the strategic implications of the Strait of Hormuz—are on the agenda. On this particular day, Brent crude futures rose by 13 cents (0.12%) to $105.76 per barrel, while U.S. West Texas Intermediate futures gained 12 cents (0.12%) to $101.14 per barrel, a recovery from previous losses attributed to concerns over potential U.S. interest rate hikes impacting demand.

Despite President Trump’s stance that he does not require China’s backing to resolve the Iran conflict, analysts highlight China’s significant role as a buyer of Iranian crude. As it is projected that over 80% of Iran’s oil shipments in 2025 will be directed to China, the country’s independent refiners continue to capitalize on discounted crude amidst international sanctions. Analysts at Morgan Stanley have characterized the global oil landscape as being in “a race against time,” especially with the potential for the Strait of Hormuz to remain closed into June, which could exacerbate supply issues despite current market safeguards and a general belief that the strait will reopen eventually.

Market vigilance is paramount as ongoing disruptions threaten to affect nearly one billion barrels of oil supply, and expectations of a ceasefire remain precarious. Analysts at Nuvama Institutional Equities warn of potential disruptions of nearly 20 million barrels per day if the Strait of Hormuz endures an extended shutdown, projecting that oil prices could rise to between $110 and $150 per barrel. In light of these considerations, stakeholders are advised to monitor developments closely, as the outcomes of diplomatic talks and negotiations could significantly influence both market stability and price trajectories in the near future.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)