Oil slipped in volatile trading as traders awaited a pivotal meeting between US President Donald Trump and Chinese counterpart Xi Jinping, while fresh US data suggested stockpiles have yet to drop to critical levels.

West Texas Intermediate fell 1.1% to settle at $101.02 a barrel, snapping a three-session winning streak. Trump downplayed the amount of attention the Iran conflict would get during his summit Thursday with Xi, saying he would prioritize trade negotiations and that “we have Iran very much under control.” China buys most of the Islamic Republic’s oil exports.

Prices eased earlier after a US government report showed that distillate inventories grew last week for the first time since March. Though the build was relatively small at 190,000 barrels, it allayed fears that the West’s supply cushion is reaching its limits. Crude stockpiles slid by 4.3 million barrels, however, nearly twice the figure projected by a widely followed industry group.

The EIA data contributed to the slide, but mostly “traders aren’t really looking to add risk in either direction ahead of the Xi-Trump meeting,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. “There’s also some hesitation to chase the rally above $100, where shifting rhetoric has consistently introduced volatility and given traders pause.”

The Middle East conflict has thrown energy markets into disarray, with refineries in Asian nations such as Japan scrambling for alternatives to supplies from the Persian Gulf. The Strait of Hormuz, which links the Gulf to open seas, has been effectively closed by Iran since the US and Israel launched the war in late February. A US naval blockade of Iranian ports adds another layer of disruption.

Even as prices slipped on Wednesday, the broader outlook remained bullish. The International Energy Agency said global observed oil inventories declined at a rate of about 4 million barrels a day in March and April. Saudi Arabia told OPEC that its output sank to the lowest level since 1990.

“With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period,” the Paris-based IEA said in its Oil Market Report. The market will remain “severely undersupplied” until October even if the conflict ends next month, the agency said.

The Iran war has sapped Trump’s domestic political standing, with recent economic data indicating hotter inflation tied to energy costs. American gasoline prices have surged to the highest since 2022, a politically sensitive development for Trump and his Republican Party ahead of crucial midterm elections in November.

Meanwhile, oil shipments from Iran’s main export terminal appear to have come to a standstill over the past several days, in the first sign of a prolonged halt since the start of the war. The country accused Kuwait of trying to “sow discord” after it attacked an Iranian boat and detained four Iranian citizens.

In another sign of wider strain, Vietnam’s state oil company has urged the US to let a supertanker laden with crude pass through its naval blockade outside the Persian Gulf, saying the shipment is vital to its economy. The vessel crossed Hormuz but U-turned on Monday near the cordon.

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