Geopolitical Developments and Fed Policy Decision Influence Crude Oil Prices

Crude oil prices are currently facing downward pressure due to potential advancements toward a ceasefire between Israel and Hamas, which has reduced geopolitical risk perceptions in the market. However, ongoing attacks by Yemen's Houthis near the Suez Canal are heightening concerns about potential disruptions to oil supply chains, thereby lending some support to oil prices despite the ceasefire prospects.

The market is keenly awaiting a response from Hamas to a proposed phased truce that Israel offered during negotiations in Cairo over the weekend. This development could significantly influence market sentiments.

In addition to geopolitical factors, financial markets are also focused on the upcoming policy decision by the US Federal Reserve on Wednesday. There is widespread concern that persistent inflation could influence the Fed's decisions regarding interest rate adjustments.

Amidst these international developments, US President Joe Biden is facing increased pressure to intensify efforts to curb Iranian crude exports in light of recent attacks on Israel. Simultaneously, ongoing conflicts between Russia and Ukraine persist, with recent incidents including Ukrainian drone strikes on the Slavyansk oil refinery, which continues to stoke fears of further disruptions in the energy supply.

On a more positive note, economic indicators from China show that both the manufacturing and services sectors expanded in April, suggesting a robust demand outlook that could positively influence global economic and oil demand forecasts.