Global fuel prices sway amid Middle East tensions and the Fed's rate decision

Fuel markets are closely watching the situation in the Middle East and waiting for the Federal Reserve's monetary decision regarding interest rates.

A barrel of crude oil costs around £62 on the New York fuel exchange. This is due to the temporary suspension of hostilities in the Middle East and the anticipated decision by the Federal Reserve regarding interest rates awaited by the fuel markets.

Barrels of West Texas Intermediate for June delivery cost approximately £62 on NYMEX in New York, down 1.10 percent.

Brent for June on ICE is priced at about £65 per barrel, down 1.00 percent. If Israel strikes at Hamas

Investors are watching what is happening in the Middle East. According to the Ynet portal, Israel decided to attack the Palestinian city of Rafah in the Gaza Strip. Hamas was said to be holding Israeli soldiers there as hostages.

Rafah is a city located on the border with Egypt, where - the Israeli army believes - the core of Hamas's forces, along with its commanders, are currently located. The Israeli army estimates that four Hamas battalions are stationed there.

Rafah is also home to civilians, including over a million refugees from other areas of the Gaza Strip.

Israeli Prime Minister Benjamin Netanyahu told the families of the fallen and kidnapped Israeli soldiers on Tuesday that a military operation in Rafah is inevitable regardless of the progress of ceasefire talks with Hamas.

Netanyahu assured that the Israeli military would enter Rafah and eliminate the Hamas battalions there with or without a deal.

In April, after Iran attacked Israel, crude oil prices saw their highest rise since October 2023. Although actions also taken by OPEC countries by reducing oil supplies are leading to higher crude oil prices, uncertainty regarding the Federal Reserve's monetary policy and the weak situation in fuel markets favour price increases of this commodity.

According to Australia & New Zealand Banking Group Ltd analysts, a possible ceasefire between Israel and Hamas would dispel market concerns about conflict escalation and potential supply disruptions from the region. Continued signs of inflation also raised concerns about demand for crude oil ahead of the US driving season, when gasoline consumption rises.

Meanwhile, according to the latest industry report from the American Petroleum Institute (API) in the US, oil stocks are rising. They increased last week by about 5 million barrels - calculated API.