Crude oil prices snapped their three-day gaining streak to ease over 1 per cent on Wednesday as peace talks between the United States and Iran remained stalled while President Donald Trump headed to China for a high-stakes meeting with Chinese President Xi Jinping.
Global oil benchmark Brent crude was hovering at around $106.30 per barrel during Asian trading hours, about 1.3 per cent lower.
The US WTI crude also slipped to the $100 per barrel mark, down by more than 1.4 per cent.
This came after gains of more than 8 per cent during the previous three trading sessions.
The decline in prices came even though no significant diplomatic breakthrough had been achieved in the conflict.
Trump had already called Iran’s peace offer “stupid”, dealing a setback to hopes of normalisation.
However, his visit to Beijing for talks with Xi Jinping is expected to provide some clarity on the US’ future diplomatic approach towards Iran.
China is the largest buyer of Iranian oil despite US sanctions. Trump said he would hold “long talks” with Xi Jinping about Iran. However, trade is expected to remain the main focus of the meeting.
The US President is facing domestic pressure as the war has taken a toll on the American economy.
As fuel costs rise, war-induced inflation has become a major challenge. In April, US consumer prices climbed sharply for the second consecutive month, leading to the steepest annual rise in inflation in nearly three years.
The data reinforced expectations that the Federal Reserve may keep interest rates unchanged for an extended period.
Oil prices are currently more than 50 per cent higher than pre-war levels. Soon after the war began in late February, the Strait of Hormuz was blocked by Iran.
The narrow waterway is a crucial passage for global energy supplies.
