Crude Oil prices remained steady over the past week with Brent deliveries remaining mostly stable at 83.13 USD/barrel along with WTI settled at 78.73 USD/barrel on 17th May 2024. However, early May saw a lowering of the Crude Oil market amidst muted global demand. The anticipated cease-fire deal in the Hamas-Israel conflict and economic uncertainty that suggested the world's oil demand would not be as high as anticipated caused a decline in the price of Crude Oil along with China and India are taking in massive amounts of Russian oil at very discounted rates. However, since April, as tensions in the Middle East have decreased, Crude Oil prices have lost almost 7% of their value, essentially eliminating the inherent risk premiums.

The Middle East, a major hotspot for Crude Oil production, saw a relative easing of tensions in early May. While geopolitical concerns receded, worries about the global economy, particularly in the United States, the world's largest oil consumer, started to begin. The persistent talk of higher interest rates in the US for an extended period dampened economic growth prospects. Higher interest rates make borrowing more expensive, which can lead businesses to scale back investments and consumers to tighten their belts. This, in turn, translates into lower demand for energy, including Crude Oil. Meanwhile, the US economy started showing signs of a slowdown. Weaker-than-expected job growth in April fueled concerns that energy consumption would decline as economic activity cools. The softer jobs data sparked speculation that the US Federal Reserve, the central bank, might cut interest rates as early as September. This prospect further added to the demand worries as lower interest rates could potentially lead to a weaker economy down the line. Adding fuel to the fire of the demand concerns was a rise in Crude Oil stockpiles. This meant that the supply of oil was exceeding demand, creating an oversupply situation.

Further dampening the price were diplomatic efforts led by US Secretary of State Antony Blinken to broker a ceasefire between Israel and Hamas. This successful agreement eliminated the risk premium associated with Crude Oil prices in the region. This risk premium reflects the additional cost consumers are willing to pay for oil due to the uncertainty and potential disruptions caused by ongoing conflicts. A decrease in tensions reduces this premium, pushing prices down. As per ChemAnalyst, the outlook for Crude Oil remains bearish, however, the uncertainty about the supply disruption could increase the prices in the upcoming weeks.