Oil prices have lost some momentum this week, snapping a three-day rally as investors adopt a wait-and-see posture ahead of the high-stakes meeting between President Donald Trump and President Xi Jinping in Beijing. Brent crude futures retreated to around $106.55 a barrel, while West Texas Intermediate slipped to $101.02, reflecting the cautious recalibration of risk premia. The dip, however, belies a market that remains stubbornly above the $100 threshold, a level it has held since the escalation of the US-Israeli confrontation with Iran earlier this year. The Strait of Hormuz, through which a fifth of the world’s oil passes, remains largely closed, injecting a persistent supply-side tension into the calculations of traders and policymakers alike.

Across Wall Street, the mood was markedly more buoyant, with technology shares powering gains in the major indices. The Nasdaq and S&P 500 touched fresh records, driven by robust earnings and continued enthusiasm for artificial intelligence investment. This tech-led rally unfolded against a backdrop of disappointing US inflation data, which has cooled expectations for an imminent rate cut by the Federal Reserve. Trump’s delegation for the Beijing summit—which includes Elon Musk, Tim Cook, and other Wall Street titans—underscores the commercial stakes intertwined with the geopolitical ones. Viewed from Washington, the summit is a critical test of whether economic and security concerns can be reconciled, particularly with the Middle East crisis complicating the trade agenda.

In Asia, markets were mixed, reflecting a more tempered optimism. Analysts in London caution against expecting a breakthrough from the Trump-Xi meeting, noting that the structural frictions between the world’s two largest economies are unlikely to be resolved in a single summit. The oil price showed signs of stabilising after the encounter, with Brent trading around $105.45 and WTI near $100.91. The lack of any dramatic announcement from Beijing contributed to a sense of equilibrium, but the underlying instability remains. The fragile ceasefire with Iran has not translated into a reopening of the Strait of Hormuz, and supply disruption risks persist.

Looking ahead, the trajectory of oil prices will depend on two interlocking variables: the durability of the Iran truce and the outcome of US-China trade negotiations. If geopolitical tensions ease, the premium built into current prices could unwind quickly, but analysts warn that the structural tightness in global supply—compounded by sanctions and war risk insurance costs—may keep crude elevated for some time. For the global economy, already grappling with stubborn inflation, the persistence of $100-plus oil presents an unwelcome headwind. The Trump-Xi summit may have passed without fireworks, but the underlying pressures have not dissipated.