Oil prices ease after climbing more than 7% over the last three sessions

Oil prices slipped on Wednesday, taking a breather after big gains over the previous three sessions. Traders were focused on President Donald Trump’s visit to China for any traction on the Iran war after diplomacy efforts between Washington and Tehran stalled.

Meanwhile, the Middle East conflict continued to take a toll on global oil demand and supply, reports from the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) showed.     

At 15:30 ET (19:30 GMT), Brent crude futures expiring in July, the global benchmark, fell 1.9% to $105.76 a barrel, while U.S. West Texas Intermediate crude futures expiring in June slipped 1% to $101.14 a barrel.

Both contracts have gained over 7% over the past three sessions, and are well above pre-war levels of around $70 a barrel. Markets have been on edge this week after Trump described a ceasefire with Iran as being on “life support” and rejected Tehran’s latest response to a U.S.-backed peace plan.

Trump-Xi talks ahead amid U.S.-Iran impasse

The spotlight was on Trump’s scheduled summit with counterpart Xi Jinping in China, where the president landed to a red carpet greeting on Wednesday. He will participate in an official state arrival ceremony on Thursday, after which he will meet with Xi and sit for multiple interviews.

Discussions between the two leaders are expected to cover a broad range of topics, including trade tensions and Taiwan.

But it may be the ongoing fight between the U.S. and Iran that will likely receive much of the attention. Analysts have suggested that China, as a major importer of Iranian crude, could be persuaded to act as a guarantor of a lasting peace deal, although some observers have ramped down expectations that such a breakthrough could come from the gathering.

"The conflict has strained energy flows to China, previously the world’s largest importer of oil through the Strait of Hormuz. While Washington has blockaded Iranian oil bound for China and sanctioned Chinese buyers, Trump downplayed how central the war would be to the talks," the Council on Foreign Relations said.

Trump on Tuesday told reporters that he would have a "long talk" about Iran with Xi, and that China had been "relatively good" about the war. "You look at the blockade, no problems. They get a lot of their oil from that area, we’ve had no problem," Trump said.

The China trip comes at a time when diplomatic efforts to forge an agreement between Washington and Tehran appear to have stalled. Earlier this week, Trump dismissed an Iranian response to an American peace proposal, describing it as “unacceptable” and a “piece of garbage.” Reports have also swirled around whether the White House will resume strikes against Iran.

IEA, OPEC slash oil demand outlook 

Away from China, both the IEA and the OPEC cut their forecasts for world oil demand this year in light of the continued supply disruption from the closure of the Strait of Hormuz. The vital waterway through which a fifth of the world’s oil and gas flows has been effectively shuttered by Iran since the start of the conflict at the end of February.

The IEA now sees world oil demand falling by 420 thousand barrels per day in 2026, significantly higher than an earlier forecast of 80 thousand barrels per day. Meanwhile, the agency said global oil supply declined by 1.8 million barrels per day in April, taking total losses since February to 12.8 million barrels per day. 

"With Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1 billion barrels with more than 14 mb/d of oil now shut in, an unprecedented supply shock. The current supply-demand gap is significantly smaller, however, as the market was already in surplus heading into the crisis while producers and consumers alike are responding to market signals," the IEA said. 

Separately, OPEC now sees total world oil demand of 1.17 million barrels per day in 2026, compared to a previous outlook of 1.38 million barrels per day. However, the oil cartel said demand is expected to bounce back to 1.54 million barrels per day in 2027, versus a prior forecast of 1.34 million barrels per day.