Oil Surges on Trump's China Deal Signal Amid Strait of Hormuz Tensions

Crude oil climbed more than a percent on Friday morning as President Trump signaled that China was prepared to purchase American oil, a development that arrived amid an escalating pattern of ship seizures and attacks in one of the world's most critical shipping corridors. Brent crude futures rose $1.17 to close at $106.89 a barrel, while U.S. West Texas Intermediate gained $1.10 to $102.27, modest but meaningful moves in a market already taut with supply concerns.

The price movement reflected two competing forces. On one side, Trump's comments during a Fox News interview suggested a potential opening in U.S.-China trade relations—specifically around energy exports—at a moment when both nations have reason to stabilize global markets. On the other side, the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's oil passes, remained a zone of active disruption. An Indian cargo vessel carrying livestock from Africa to the United Arab Emirates sank off Oman's coast on Wednesday. A second ship was seized by Iranian personnel on Thursday and directed toward Iranian waters. These incidents underscored a pattern that has persisted despite official assurances of normalcy.

Iran's Revolutionary Guards reported that approximately 30 vessels had transited the Strait of Hormuz since Wednesday evening—a figure that, if accurate, represents a significant uptick from the severely depressed traffic of recent weeks. Before the current tensions, the waterway typically saw around 140 ships pass through daily. The gap between that historical baseline and the current flow illustrates the scale of disruption, even as some traffic has resumed. The White House noted that Trump and Chinese President Xi Jinping, who was concluding a two-day state visit, had agreed on the importance of keeping the strait open for commerce.

Yang An, an analyst at Haitong Futures, cautioned against reading too much into the modest price gains. The underlying driver of oil markets, he suggested, remained the fundamental tightness of global supply rather than any single geopolitical development. "Oil prices swung several times yesterday but still closed near the day's high," he observed, noting that while the resumption of some ship traffic had eased immediate market anxiety, it was insufficient to alter the broader upward pressure on prices. The market, in other words, was pricing in scarcity more than relief.

Trump's posture toward Iran hardened during the same period. In his Fox News remarks, he indicated he would not exercise patience indefinitely with Tehran and pressed the country to negotiate a deal with Washington. U.S. Trade Representative Jamieson Greer, speaking to Bloomberg on Friday morning, characterized China's approach as pragmatic, noting that Beijing understood the strategic importance of maintaining open passage through the Strait of Hormuz. The implication was clear: both Washington and Beijing, despite their broader tensions, shared an interest in preventing further disruption to global energy flows.

The convergence of these elements—Trump's signaling of potential Chinese purchases of American oil, the continuation of shipping incidents despite some traffic resuming, and the administration's hardening stance toward Iran—created a moment of modest market movement. Yet the underlying conditions that have driven oil prices upward remained in place. Supply remained constrained, the strait remained contested, and the diplomatic path forward remained uncertain. The price gains reflected not confidence in resolution but rather the market's calculation that the current state of tension and disruption would persist.