Oil market freezes in anticipation as investors watch Trump-Xi talks

Global oil prices rose modestly on May 14 as investors focused on a meeting between US President Donald Trump and Chinese leader Xi Jinping. Market participants expect the talks to have an impact on the Iran conflict, which has already weighed on global oil supplies.

Brent crude futures rose 26 cents, or 0.25%, to $105.89 a barrel, Reuters reported. US West Texas Intermediate (WTI) crude futures also rose 32 cents, or 0.32%, to $101.34 a barrel.

The market had been in the opposite direction the previous day. Both key oil benchmarks fell sharply on Wednesday as investors worried about a possible increase in US interest rates. The reason for such fears was the rise in energy prices, which is increasing inflationary pressure on the US economy. As a result, Brent lost more than $2 per barrel, while WTI fell by more than $1.

The main intrigue of the current negotiations between Washington and Beijing remains the Iranian issue. It is expected that Trump will try to convince Xi Jinping to influence Tehran to reach agreements with the US and end the conflict. However, experts doubt that the Chinese leader will agree to put serious pressure on Iran, which has long been one of China's key strategic partners.

In addition to the situation around Iran, the parties plan to discuss several other important topics. Among them are the unstable trade truce between the US and China, the further development of the conflict in the Middle East, as well as the issue of supplying American weapons to Taiwan.

Analysts from the ING financial group note that the oil market is currently in a state of expectation. In their opinion, investors may be overestimating the likelihood of a quick breakthrough in US-China talks on Iran. At the same time, IG Group expert Tony Sycamore warned that the lack of progress on the issue of opening the Strait of Hormuz may leave the US with limited options for action, except for a return to a military scenario.

In parallel, Iran, according to analysts, is strengthening control over the region. The country has concluded new agreements with Iraq and Pakistan on the supply of oil and liquefied natural gas. This may strengthen Tehran's position in the energy sector and affect the future balance of power in the Middle East.

An additional signal for the market was the passage of a Chinese supertanker through the Strait of Hormuz. The vessel was transporting 2 million barrels of Iraqi crude oil and was able to leave the Persian Gulf after a delay of more than two months caused by the war between the US and Iran. It is noteworthy that this tanker became only the third oil vessel that was able to pass through the strait since the beginning of hostilities.