By Stephanie Kelly
LONDON, May 13 (Reuters) – Oil prices were little changed on Wednesday as investors monitored a fragile Middle East ceasefire and awaited a high-stakes summit in Beijing between U.S. President Donald Trump and China’s Xi Jinping.
Brent crude futures were up 23 cents, or 0.2%, to $108.00 a barrel at 1043 GMT. U.S. West Texas Intermediate futures were down 10 cents, or 0.1%, to $102.08.
Both benchmarks have hovered around or above $100 per barrel since the U.S.-Israeli war on Iran began at the end of February after which Tehran effectively shut the vital Strait of Hormuz.
“The market remains highly reactive to every update from the region, meaning sharp swings are likely to persist. Any further escalation or direct threat to supply flows could quickly revive strong upside momentum in both Brent and WTI,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Supporting prices, the International Energy Agency said global oil supply would not meet total demand this year as the war wreaks havoc on Middle Eastern production.
“The latest IEA oil market report just showed the magnitude of the disruption with large oil inventory declines over the last two months,” UBS analyst Giovanni Staunovo said.
The IEA also said Russia’s crude oil production declined by 460,000 barrels per day in April from a year earlier to around 8.8 million bpd, as Ukraine ramped up drone attacks on energy targets.
TRUMP SAYS HE DOES NOT NEED CHINA’S HELP TO END WAR
On Tuesday, oil prices rose more than 3% as hopes for a lasting U.S.-Iran ceasefire faded, dimming prospects for reopening the strait, through which about a fifth of global oil and liquefied natural gas normally flows.
Trump said on Tuesday he did not think he would need China’s help to end the war, even as prospects for a lasting peace deal weakened and Tehran tightened its grip over the strait.
China is the biggest buyer of Iranian oil despite sanctions pressure from the Trump administration. Trump is scheduled to meet Xi on Thursday and Friday.
“The length of the disruption and the scale of the supply loss – already more than 1 billion barrels – means oil prices are likely to remain above $80 per barrel for the rest of the year,” Eurasia Group said in a client note.
The war has begun to weigh on the U.S. economy, with higher oil prices pushing up fuel costs and economists expecting to see second-round effects in the months ahead.
In April, U.S. consumer prices rose sharply for a second straight month, producing the largest annual increase in inflation in nearly three years and reinforcing expectations the Federal Reserve will keep interest rates steady for a while.
