The Crude Oil market has witnessed a significant surge in prices over the past month and continued its upward rally during the second week of October 2024, driven by a geopolitical and monetary factor. The intensifying conflict in the Middle East, coupled with increased demand from China and accommodative monetary policies, has led to higher Crude Oil prices.

The Crude Oil market showcased another weekly increase in prices with Brent settling at USD 78.11/barrel a hike of 5.3% while WTI at USD 74.32/barrel at an increasing rate of 5.7% during the second week of October 2024, supported by the Middle East war and worries about possible supply interruptions.

The conflict between Israel and Hezbollah in the Middle East has raised fears of a potential full-scale regional war, which could disrupt oil supply routes and maritime trade. This geopolitical uncertainty has introduced a risk premium into the Crude Oil market, leading to a sharp increase in prices. China, the world's largest importer of Crude Oil, has played a crucial role in driving up demand. The Chinese government has implemented a series of economic stimulus measures aimed at boosting domestic consumption and investment. These policies have led to a surge in demand for energy, including Crude Oil, as economic activity accelerates.

Moreover, the accommodative monetary policies pursued by central banks, such as the U.S. Federal Reserve, have provided upward support for Crude Oil prices. Lower interest rates stimulate economic growth, leading to increased energy consumption. This, in turn, drives up demand for Crude Oil during this timeframe. The OPEC+ decision to further cut oil production in October has also contributed to the price surge. By reducing the global supply of Crude Oil, OPEC+ has tightened the market and pushed prices higher. This move has been seen as a strategic response to the rising geopolitical tensions and the potential for increased demand.

However, as per ChemAnalyst, the price of Crude Oil is predicted to decline as the trading session draws to a close. Saudi Arabia, the United Arab Emirates, and Qatar have been politicizing the United States to prevent Israel from attacking Iran's oil facilities which somewhat reduces the risk. These countries fear that such an attack could escalate the conflict and lead to retaliatory strikes against their oil infrastructure. Moreover, the release of disappointing Chinese inflation data over the weekend has further dampened sentiment in the Crude Oil market. Weak economic indicators in China raise concerns about future oil consumption and could lead to a decline in prices.