Fear of recession and interest rates: oil prices plummet
The turbulence surrounding the Swiss bank Credit Suisse and concerns about further interest rate hikes are weakening the oil price. This dropped significantly at the start of the week.
Oil prices started the new trading week on Monday with significant discounts. In the morning, a barrel (159 liters) of North Sea Brent for delivery in May cost 71.47 US dollars. That was $1.50 less than Friday. The price of a barrel of American grade West Texas Intermediate (WTI) for April delivery fell by $1.33 to $65.41.
On the market, the price reductions were attributed to the stock exchanges’ rather negative reaction to the takeover of the major Swiss bank Credit Suisse by UBS. The turbulence fueled recession fears, stockbrokers said. The banking turmoil in the US and Europe already had a noticeable impact on oil prices last week.
The background is, on the one hand, that crude oil is one of the risky asset classes and price movements on the oil market therefore depend on the mood on the stock exchange. On the other hand, there are fears that the turbulence will have an impact on the economy, which in turn could be reflected in lower oil demand. In addition, stockbrokers expect the US Federal Reserve to raise interest rates further due to high inflation.
