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EMEA Oil Update: Crude Steadies on Xi-Trump Talks, Iran Allows Select Hormuz Transits

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EMEA crude futures were little changed in after-hours trading on Thursday as President Trump and his Chinese counterpart discussed the ongoing Middle East conflict, while Iran allowed a limited number of vessels to transit the Strait of Hormuz.

Brent crude futures eased by 0.44% to $105.16 per barrel, while Murban oil futures were up 0.42% to $104.59/bbl.

Trump met China's President Xi Jinping on Thursday, and the two leaders' discussions included the ongoing Iran conflict and increased oil ties between the world's two biggest economies.

The US President said the Chinese leader had offered China's help to open the Hormuz and pledged not to send military equipment to aid Iran in its ongoing conflict against the US-Israel alliance.

US Treasury Secretary Scott Bessent reportedly said China will use its influence in Iran to help reopen the strategic waterway. China is the biggest buyer of Iranian oil despite pressure from the Trump administration.

Bessent said it is in China's interest to get the strategic waterway reopened, adding that Beijing will be working behind the scenes, according to media reports.

"Oil prices established as US President Trump and Chinese President Xi began high-level talks in Beijing, while the Iran war and the near closure of the Strait of Hormuz continued to disrupt global energy markets," said Soojin Kim, research analyst at MUFG.

The effective closure of the Hormuz has significantly disrupted global supplies of crude, natural gas and fuels, stoking fears of reignited inflation.

Meanwhile, Iran said on Thursday it had begun allowing some Chinese vessels to transit through the Hormuz following an agreement on Tehran's management protocols for the waterway.

Iran's National Security and Foreign Policy Commission reportedly finalized a comprehensive plan on Wednesday for the security and development of the Persian Gulf and the Strait.

The United Kingdom Maritime Trade Operations Center says it received a report of a vessel being "taken by unauthorized personnel" near the UAE emirate of Fujairah. UKMTO said the ship was taken 38 nautical miles off the UAE in the Gulf of Oman, where it was anchored.

The US Central Command said on Thursday it has redirected 70 commercial vessels as part of a blockade targeting ships entering and exiting Iranian ports.

On the supply front, the International Energy Agency said on Wednesday that global observed oil inventories dropped by 250 million barrels in March and April, or at a rate of about 4 million barrels per day, as demand is now expected to contract by 2.4 million b/d year-over-year in Q2 and 420,000 b/d for the entire year.

OPEC also said on Wednesday that crude production among member states fell further in April and is down more than 30% since the onset of the conflict in late February. The producer group said production fell by 1.7 million b/d in April after output plunged by 7.9 million b/d in March.

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US Oil Update: Crude Gains on Xi-Trump Talks, Iran Eases Select Hormuz Transits

Crude oil futures advanced in midday trading on Thursday after the White House said President Trump and Chinese President Xi Jinping agreed that the Strait of Hormuz must remain open, as allowed passage via the key chokepoint to select vessels.Front-month West Texas Intermediate crude futures rose by 0.92% to $101.88 per barrel, while Brent futures gained 0.36% to $106.06/bbl.US crude inventories fell by 4.3 million barrels to 452.9 million barrels in the week ended May 8, the Energy Information Administration said in its weekly report on Wednesday. The agency said the stockpiles are now about 0.3% above the five-year average for this time of year."The draw is driven by continued strength in crude oil exports, which grew by 742k b/d week-on-week," ING strategists said in a note on Thursday.On Thursday, Trump met China's President Xi Jinping in Beijing, and the two leaders' discussions included the ongoing Iran conflict and increased oil ties between the world's two biggest economies.The US President said President Xi had offered China's help to open the Hormuz and expressed interest in buying American oil to reduce Beijing's dependence on the strategic waterway in the future.US Treasury Secretary Scott Bessent also said China will use its influence in Iran to help reopen the strategic waterway, according to media reports. China is the biggest buyer of Iranian oil despite pressure from the Trump administration."Oil prices established as US President Trump and Chinese President Xi began high-level talks in Beijing, while the Iran war and the near closure of the Strait of Hormuz continued to disrupt global energy markets," said Soojin Kim, research analyst at MUFG.Iran began allowing some Chinese vessels to transit through the Hormuz on Thursday following an agreement on Tehran's management protocols for the waterway. Iran's National Security and Foreign Policy Commission has reportedly finalized a comprehensive plan for the security and development of the Persian Gulf and the Strait.Meanwhile, the United Kingdom Maritime Trade Operations Center says it received a report of a vessel being "taken by unauthorized personnel" near the UAE emirate of Fujairah. UKMTO said the ship was taken 38 nautical miles off the UAE in the Gulf of Oman, where it was anchored.On Thursday, the US Central Command also said it had redirected 70 commercial vessels as part of a blockade targeting ships entering and exiting Iranian ports.The ongoing Middle East conflict has driven global oil inventories down at a record pace, and the market will remain "severely undersupplied" until October even if the conflict ends next month, the International Energy Agency said in its monthly report on Wednesday."With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA said in its Oil Market Report.The IEA said that global observed oil inventories dropped by 250 million barrels in March and April, or at a rate of about 4 million barrels per day, as demand is now expected to contract by 2.4 million b/d year-over-year in Q2 and 420,000 b/d for the entire year.Market participants are closely monitoring the expiry of a US sanctions waiver allowing purchases of Russian oil cargoes, which could further tighten global supply conditions.

Oil & Energy

Trump Says Xi Wants Strait of Hormuz Open as Leaders Discuss Iran Conflict in Beijing

US President Donald Trump said Thursday that Chinese President Xi Jinping expressed hope that a peace deal will be made soon with Iran and the Strait of Hormuz will be reopened, as the two leaders met in Beijing."He would like to see the Hormuz Strait open," Trump told Fox News in an interview as the Iran conflict continued to disrupt oil shipments through the key trade route."President Xi would like to see a deal made. He would, he would like to see a deal made," Trump told Fox News after the first day of talks in Beijing. "And he did offer. He said, 'If I can be of any help at all, I would like to be of help.'"The Strait of Hormuz "must remain open," a US summary of the meeting reported, adding that China opposed militarization or tolls in the waterway.Secretary of State Marco Rubio told NBC News Thursday that the US raised the Iran issue because of its global importance, adding that the US does not need China's help on the issue.Trump invited Xi to visit the White House in September during opening remarks in Beijing.Separately, Xi warned Trump during the summit that mistakes over Taiwan could damage relations and even push both countries toward conflict."The Taiwan question is the most important issue in China-US relations. If mishandled, the two nations could collide or even come into conflict," Chinese state media outlet Xinhua cited Xi as saying.The two countries "should be partners and not rivals," Xi said as the leaders opened talks at Beijing's Great Hall of the People.The meeting lasted about two hours and 15 minutes and covered Iran, trade, Taiwan and broader geopolitical tensions between the two countries, according to the media reports.The summit added pressure for Trump as the Iran conflict weighed on his approval ratings and increased pressure for diplomatic and economic gains.

Oil & Energy

Update: Brazil Approves Subsidies for Gasoline, Diesel

(Updates with additional details from Brazilian government statement.)The Brazilian government on Wednesday said it will subsidize gasoline and diesel through a Provisional Measure to mitigate the inflationary impact of the Middle East conflict."The objective is to cushion the rise in fuel prices caused by the prolonged war in the Middle East," according to a statement by the Ministry of Planning and Budget.The Ministry of Finance will publish a decree over the next few days establishing the subsidized amounts.The subsidy will be paid directly to gasoline producers and importers through the National Agency of Petroleum, Natural Gas and Biofuels, or the ANP, according to the statement.Brazil's Minister of Mines and Energy Alexandre Silveira, the Minister of Planning and Budget Bruno Moretti, and the Executive Secretary of the Ministry of Finance, Rogerio Ceron, jointly made the announcement during a press conference on Wednesday.The Provisional Measure establishes that the subsidy cannot exceed the ceiling of federal taxes levied on fuels, the statement said.Gasoline is currently taxed at 0.89 Brazilian reais ($0.17) per liter, inclusive of federal fuel taxes, while diesel is taxed at 0.35 Brazilian reais per liter, which was suspended in March.The new subsidy will start with gasoline, which has not received any subsidy or tax cut since the war began. "But it could be extended to diesel when the subsidy established by Provisional Measure No. 1,340, with a planned duration for the months of April and May, ceases to be applied," according to the statement.The new subsidy is part of Brazil's broader effort to curb fuel price increases linked to the Middle East conflict.The government has already announced subsidies of 1.52 Brazilian reais per liter for imported diesel and 1.12 Brazilian reais per liter for domestically produced diesel.According to a Bloomberg report, citing Planning Minister Bruno Moretti, the government intends to spend up to 2.9 billion reais per month to subsidize both domestically produced and imported gasoline and diesel.The program was introduced on Wednesday through a directive issued by President Luiz Inacio Lula da Silva, who is likely to seek re-election later this year. It will run for two months and will be extended if required, the report added.The subsidy is expected to be extended to diesel from June onwards following the expiry of an existing one at the end of May, Reuters reported.The directive was issued after a proposal to slash federal fuel taxes stalled in Congress, according to Reuters.The move is expected to allow Petrobras (PBR) to increase prices. The state-controlled energy major has delayed price revisions to shield domestic consumers from international oil price volatility, a separate Bloomberg report said.Price: $19.97, Change: $+0.38, Percent Change: +1.94%

$PBR