Key Points:
- Brent crude and West Texas Intermediate oil prices stabilized around $106 and $102 after Trump and Xi met in Beijing.
- The two leaders discussed increasing global oil trade and firmly agreed that Iran must never obtain a nuclear weapon.
- Ongoing conflict in the Middle East keeps the Strait of Hormuz closed, dropping oil flows by 6 million barrels a day.
- Trump brought top technology executives to China to negotiate cooperation on artificial intelligence and broader business access.
Global oil markets held steady this week as United States President Donald Trump and Chinese President Xi Jinping opened their highly anticipated summit in Beijing. The two leaders immediately struck an optimistic tone, pushing aside recent tensions to focus on new opportunities for economic collaboration. Xi set the stage by declaring that the United States and China must operate as partners rather than rivals. He emphasized that their shared global interests far outweigh their political differences. Xi called for making 2026 a historic year of renewal for the relationship. Trump matched this positive energy, calling Xi a great leader and predicting that ties between the two global powers will soon be better than ever.
The energy sector reacted calmly to the positive diplomatic signals. Brent crude traded steadily around $106 per barrel, finding solid ground after dropping 2% in the previous session. West Texas Intermediate also stabilized, hovering near $102 a barrel. The White House reported that the two leaders spent significant time discussing ways to increase direct oil trade between their nations. During these energy talks, both sides found rare common ground on a major security issue, agreeing firmly that Iran can never possess a nuclear weapon.
This high-level meeting takes place against the dark backdrop of a massive conflict in the Middle East that shows absolutely no signs of ending. The ongoing war involving the United States, Israel, and Iran continues to wreak havoc on international shipping. Just on Thursday, a United Kingdom naval group reported that hostile forces took control of a commercial ship in the Gulf of Oman and steered it directly into Iranian waters. This hijacking serves as the latest reminder that Tehran still exercises dangerous control over the vital shipping waterway.
The war in the Middle East has driven global oil inventories down at a record pace over the past few months. According to the International Energy Agency, the global energy market will remain severely undersupplied until at least October, even if the warring parties agree to a peace deal next month. Data from the United States Energy Information Administration shows the true damage to the supply chain. Flows of crude oil and refined fuels through the crucial Strait of Hormuz plummeted by nearly 6 million barrels a day during the first quarter of the year after hostilities erupted in late February. Only a tiny trickle of brave oil tankers managed to exit the Persian Gulf since the fighting began.
Iranian oil shipments practically vanished due to a strict United States naval blockade clamping down on the nation’s ports. Satellite images collected by Bloomberg News revealed that the massive oil jetties at the main Kharg Island export terminal sat empty on Tuesday. This marks the fourth consecutive time that passing satellites captured absolutely zero tanker activity at the normally busy facility. The American blockade effectively choked off a major source of revenue for the Iranian government and removed millions of barrels of oil from the global market.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, explained how the market views the current situation. She noted that as long as the path leans toward diplomacy rather than outright military escalation, oil traders will remain focused on the endgame. The market desperately wants to know when normal oil flows will ultimately resume, even as the realistic timeline for peace continues to slip further away. Before his two-hour meeting in Beijing on Thursday, Trump told reporters at the White House that he would prioritize trade talks over deep discussions about the Middle East conflict during his trip.
A fragile ceasefire has technically remained in place since early April, despite a series of violent flare-ups in the region. However, the United States and Iran appear to be making very little actual progress toward resolving their major differences and toward signing a lasting peace agreement. This political deadlock keeps the Strait of Hormuz effectively closed, choking off crucial energy supplies to desperate global customers. The situation will soon grow even tighter for some countries. A special sanctions waiver issued by the United States that allowed the purchase of Russian oil currently floating on the water will expire this weekend. This expiration leaves refiners in India, one of the world’s largest buyers, highly vulnerable. The South Asian nation imported bumper volumes of oil so far this month to prepare for the cutoff.
Beyond the oil crisis, Trump arrived in Beijing with a heavy-hitting cadre of major American business leaders. This trip marks the first Chinese state visit by a United States leader in nearly a decade, and Trump wants to secure massive business deals. The two nations need to repair ties after fighting a bitter trade war throughout most of 2025. They also face continued disagreements over advanced artificial intelligence technology. Trump brought Nvidia Chief Executive Officer Jensen Huang on the trip, which immediately spurred hopes for looser restrictions on American chip sales to China. Trump explicitly stated before his flight that he would ask Xi to open up the Chinese market to American businesses.
Trump and Xi also plan to tackle highly sensitive political topics during their time together. The American president stated earlier that he would directly raise the issue of weapons sales to Taiwan with the Chinese leader. Taiwan always creates friction between Washington and Beijing, requiring delicate diplomatic handling. To ensure the summit ran smoothly, top officials from both sides did the heavy lifting earlier in the week. United States Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng met in South Korea on Wednesday to lay the groundwork for Thursday. The two financial leaders successfully set an optimistic tone that carried right into the main event.
