Iran Conflict Raises Oil Price Risk Ahead of Trump-Xi Talks

The U.S.-Iran conflict and a closure of the Strait of Hormuz disrupted global oil flows and pushed prediction markets to lower the chance of a permanent U.S.-Iran peace deal before President Trump’s China visit to 0.1%, down from 1% a day earlier and 19% a week earlier. One market measure places the probability that West Texas Intermediate will reach $110 per barrel in May 2026 at 51%, down from 56% the previous day; other contract buckets show material odds at higher strike levels.

The Strait of Hormuz handles a large share of seaborne crude exports. With transits restricted, tankers were rerouted, refiners and traders reallocated cargoes, freight costs rose and available spare capacity narrowed. Those operational changes tightened the physical market and affected shipping and refining logistics.

President Trump is scheduled to meet Xi Jinping in Beijing. U.S. and Chinese officials expect energy topics to be on the agenda, including measures related to supply chains, maritime security and sanctions that affect oil flows. Any formal statements or agreements issued after the meetings could influence market pricing.

Market participants are monitoring developments in the U.S.-Iran conflict such as military actions or diplomatic moves; specific outcomes or memoranda from the Trump-Xi meetings that mention energy supply, sanctions or maritime security; and physical oil-flow data, including tanker movements through the Persian Gulf and available refinery capacity.

Prediction-market pricing converts these operational and political risks into probabilities. Current pricing shows a reduced chance of an early peace settlement and elevated odds of higher WTI prices in May 2026. Near-term market direction will depend on actions by President Trump, Xi Jinping and Iranian leaders.