Crude oil markets retreated on Wednesday, breaking a three-session winning streak. Brent crude declined 0.8% to settle at $106.91 per barrel, while U.S. West Texas Intermediate decreased 1% to reach $101.14.
The downturn occurred as market participants awaited developments regarding a tenuous Middle East ceasefire and anticipated results from the upcoming summit between U.S. President Donald Trump and Chinese President Xi Jinping scheduled for Thursday and Friday in Beijing.
Crude benchmarks have maintained positions near or exceeding $100 per barrel since the U.S.-Israeli military campaign against Iran commenced in February’s closing days. The confrontation prompted Tehran to essentially close the Strait of Hormuz, a critical maritime corridor.
Approximately 20% of worldwide oil and liquefied natural gas typically transits through this strategic waterway. Its blockade has tightened global supplies and sustained elevated price levels.
“The market remains highly reactive to every update from the region, meaning sharp swings are likely to persist,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
On Tuesday, prices had surged more than 3% following diminished prospects for a durable ceasefire. This development reduced expectations for the strait’s imminent reopening.
ING analysts noted that energy markets continue operating “in limbo” ten weeks into the military engagement. Gulf region supply interruptions and decreasing stockpiles are creating uncertainty for market direction.
According to American Petroleum Institute figures, U.S. crude stockpiles decreased for the fourth consecutive week. Distillate reserves also dropped. Official government inventory statistics were scheduled for release later Wednesday.
Eurasia Group informed clients in a research note that supply losses have already surpassed one billion barrels. The consultancy anticipates crude will maintain prices above $80 per barrel through year’s end.
The U.S. Energy Information Administration projects the Strait of Hormuz will remain impassable until late May at the earliest. Even with resumed shipping activity in June, normal flow volumes aren’t expected to materialize until the second half of 2026.
Trump stated Tuesday he doesn’t anticipate requiring Chinese assistance to conclude the Iranian conflict. China purchases more Iranian crude than any other nation despite ongoing U.S. sanctions enforcement.
Energy market participants are monitoring the Trump-Xi discussions intently. Any modification in Beijing’s stance toward Iranian petroleum could influence worldwide supply configurations.
Elevated crude costs are impacting American consumers directly. Fuel expenses have increased, and U.S. consumer price indices rose substantially for a consecutive second month in April, marking the steepest yearly gain in almost three years.
Economists project continued inflationary pressure in coming months. The Federal Reserve is broadly anticipated to maintain current interest rate levels, which may eventually dampen petroleum demand.
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