Oil slips amid Israel, Iran ceasefire uncertainty

May 13, 2026 (MLN): Crude oil prices pulled back on Wednesday, breaking a three-session winning streak as global markets held their breath over two pivotal developments.

These included the shaky ceasefire between Israel and Iran, and a high-profile diplomatic meeting in Beijing where President Donald Trump is set to sit down with Chinese leader Xi Jinping, according to Reuters.

Currently, Brent crude futures are slightly higher by $0.18, or 0.17%, to $107.95 per barrel, according to data by Mettis Global.

West Texas Intermediate (WTI) crude futures are down by $0.06 or 0.06%, to $102.12 per barrel by [04:25 pm] PST.

Since late February, when the United States and Israel launched military operations against Iran and Tehran responded by choking off traffic through the Strait of Hormuz, both Brent crude and West Texas Intermediate have remained stubbornly anchored near or above the $100-per-barrel threshold.

A level that has rattled energy markets worldwide.

Wednesday's early losses were partially clawed back after the International Energy Agency released a sobering assessment, warning that global oil output is on track to fall short of worldwide demand this year a direct consequence of the war's devastating impact on production across the region.

Adding further strain to an already tight market, the IEA reported that Russian crude production fell by approximately 460,000 barrels per day last month compared to April 2025, dropping to around 8.8m barrels per day.

The decline comes as Ukrainian drone strikes on Russian energy infrastructure have intensified significantly in recent weeks.

With diplomatic outcomes in both the Middle East and Beijing still uncertain, traders are bracing for continued turbulence across energy markets in the sessions ahead.

Oil had surged more than 3% on Tuesday as optimism over a durable U.S.-Iran ceasefire dimmed, keeping the critical strait through which roughly one-fifth of global oil and liquefied natural gas passes firmly closed to normal traffic.

Trump stated Tuesday that he sees no need for Beijing's involvement in bringing the war to an end, even as peace prospects continued to deteriorate and Iran maintained its stranglehold over the waterway.

Notably, China remains the single largest buyer of Iranian crude despite ongoing U.S. sanctions pressure. Trump is set to sit down with Xi on Thursday and Friday.

Risk consultancy Eurasia Group warned clients that given how prolonged the disruption has become with supply losses already exceeding one billion barrels oil prices are likely to stay above the $80-per-barrel mark through year-end.

The conflict with Iran is beginning to weigh on the broader U.S. economy, as elevated oil prices push fuel costs higher. Economists anticipate further knock-on effects in the coming months.

U.S. consumer prices climbed steeply for a second consecutive month in April, producing the biggest year-on-year inflation jump in nearly three years reinforcing expectations that the Federal Reserve will hold interest rates at their current levels for an extended period.

Higher borrowing costs, in turn, risk dampening oil demand further.

Meanwhile, U.S. crude inventories declined for the fourth week running last week, with distillate stockpiles also falling, according to data cited from the American Petroleum Institute.

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