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%Oil prices are on track for their biggest weekly decline in three months as tensions in the Middle East ratchet down and global demand weakens.

Brent crude oil, the international standard, is currently trading at $84.10 U.S. per barrel, while West Texas Intermediate (WTI) crude oil, the American benchmark, has fallen below $80 U.S. a barrel to trade at $79.29 U.S.

Both benchmarks are on course for weekly losses as tensions across the Middle East cool and U.S. economic growth declines, putting downward pressure on oil demand forecasts.

America remains the world's biggest consumer of oil.

For the week, Brent crude oil is tracking for a decline of 6%, while WTI’s loss is pegged at 5%.

The U.S. Federal Reserve held interest rates steady this week, and noted high inflation readings that could delay rate cuts, depressing equity markets and causing bond yields to spike.

Higher interest rates typically weigh on the economy and can reduce oil demand. At the same time, the economy in China, the world’s second-largest oil consumer, also continues to slump.

Geopolitical risks that had led crude oil prices to rise in recent weeks have faded as Israel and Hamas consider a ceasefire and hold talks with international mediators.

Energy traders also have their eyes on a meeting of OPEC+ oil producers that is scheduled for June 1.

OPEC+ could extend its voluntary oil output cuts of 2.2 million barrels per day if oil demand does not improve in the coming weeks, say analysts.