Global oil prices traded flat on Thursday morning ahead of the much-anticipated meeting between the US and Chinese presidents in Beijing.
At 7:40 am, the July contract of Brent on the Intercontinental Exchange was trading at $105.62, down 0.01% from its previous close, while the June contract of West Texas Intermediate on the NYMEX was 0.02% higher at $101.04 a barrel.
US President Donald Trump told reporters that trade talks would take precedence over the West Asia crisis during his discussions with Chinese President Xi Jinping.
However, a BBC report said that during the , both the leaders are expected to discuss tariffs, competition over technology, the war in Iran, and the US’ relationship with Taiwan. Trump’s trip to China was originally scheduled for March but was postponed amid the war in West Asia.
The war and the blockade of the have severely impacted global oil supplies and inventories, given that the strait is a key channel for 20% of global oil and gas trade.
The conflict has driven global oil inventories down at a record pace.
IEA warning
The International Energy Agency, in its monthly oil market report for May released on 13 May, said the market will remain severely undersupplied through the end of Q3 2026, even if the conflict ends by early June.
In the report, the IEA noted that there is currently a shortage of about 6 million barrels per day. The cumulative global supply loss already stands at more than 1 billion barrels and could reduce global production by 3.9 million barrels per day across 2026.
On the demand side, the IEA now expects global oil demand to fall by 420,000 bpd to 104 million bpd over the full year — a decline more than five times the scale it projected last month. Before the conflict, it had expected annual demand to grow by 850,000 bpd.
India impact
The conflict has also severely impacted to India. The price of the India basket of crude oil as of 12 May was $109.05 a barrel.
The Indian basket of crude oil represents a derived basket comprising the Sweet grade (Brent Dated) and Sour grade (Oman & Dubai average) crude imported by Indian refineries.