May 14 (Reuters) - Most Gulf stock markets closed lower on Thursday as investors closely watched the crucial meeting between U.S. President Donald Trump and Chinese President Xi Jinping for signs of a possible end to the ongoing conflict in the Middle East.

Trump is expected to encourage Beijing to persuade Tehran to reach an agreement with the United States to end the war. However, analysts doubt Xi's willingness to exert strong pressure on Iran or end military support for it, given Iran's strategic importance to China as it seeks to counterbalance Washington.

The war broke out in late February and led to a surge in energy prices, prompting governments to take measures to support consumers as efforts to end the conflict continued to falter.

At the start of the two-day meeting, Xi said today that trade talks with the United States were making progress, but warned that tensions over Taiwan could push relations onto a dangerous path.

Meanwhile, the semi-official Fars News Agency reported on Thursday, citing an informed source, that Tehran has begun allowing some Chinese ships to pass through the Strait of Hormuz following an understanding reached on protocols for the Iranian administration of this vital waterway.

The Saudi index fell 0.2 percent, weighed down by a 0.8 percent drop in shares of oil giant Saudi Aramco.

Brent crude futures fell $1.27 to $104.36 a barrel by 12:12 GMT, after earlier hitting a high of $107.13 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday lowered its forecast for global oil demand growth in 2026, joining the International Energy Agency and other institutions in reducing projections as the Iran war impacts future prospects.

Dubai's main index fell 0.4 percent, weighed down by a 1.6 percent drop in Salik shares.

The chairman of the UAE Banks Federation said on Wednesday that there were no concerns about increased capital outflows or a dollar shortage in light of the Iran war, even as the UAE seeks to conclude a currency swap agreement with the United States.

In Abu Dhabi, the index closed the session with little change.

Geopolitical risks continue to cast a shadow over the relative calm in the region. George Pavel, General Manager of Naga.com in the Middle East, said that the ongoing uncertainty and instability in the Strait of Hormuz are affecting investor sentiment and casting a shadow over economic prospects.

He added that higher oil prices may provide some support for energy exporters, but markets are likely to remain cautious in the near term due to continued volatility and limited diplomatic progress.

Qatar's index rose 0.2 percent, with Qatar Industries shares climbing 1.4 percent.

Bahrain’s index fell 0.2 percent, Oman’s 2.7 percent, and Kuwait’s 0.1 percent.

Outside the Gulf region, Egypt's blue-chip index fell 0.4 percent.

Egypt signed a $1.5 billion loan agreement with the International Islamic Trade Finance Corporation on Wednesday to support food and energy security.