Oil futures slipped on Monday as profit-taking kicked in, while hopes to reopen the Strait of Hormuz faded raising global supply concerns.
Front-month West Texas Intermediate crude futures dipped 1.7% to $103.60 per barrel, while Brent futures fell 1.3% to $107.86/bbl.
"The oil market continues to reprice ongoing supply disruptions, with last week's Trump-Xi talks yielding no tangible progress in the Middle East," ING analysts said.
The political gridlock has extinguished immediate hopes for a diplomatic breakthrough.
Markets had anticipated that Beijing would leverage its strategic relationship with Tehran to encourage a reopening of the blockaded Strait of Hormuz.
Instead, Trump concluded the bilateral meeting without securing an agreement, raising structural concerns that vital maritime oil flows will remain choked for the foreseeable future, analysts noted.
The physical toll of the ongoing shipping blockade is becoming increasingly evident in regional export volumes.
Iraq's oil minister, Basim Mohammed Khudair, reportedly confirmed that Iraqi crude oil exports transiting the Strait of Hormuz plummeted to just 10 million barrels in April.
This represents a decline from the country's pre-war monthly export baselines of about 93 million barrels, underscoring the severity of the supply crunch facing global refiners, analysts said.
Meanwhile, J.P. Morgan analysts noted that a core assumption of their current market framework is that the accelerating pace of global oil inventory depletion must ultimately force the reopening of the Strait of Hormuz, one way or another.
However, the bank cautioned that even if shipping lanes resume operations by early June, the broader balances imply a structurally tight market well into the second half of the year.
Concurrently, Saxo Bank analysts highlighted that geopolitical volatility remains elevated, pointing to Trump's recent remarks to Axios warning Iran that it "will have to get there or they will be hit badly."