Is the fall in oil prices a sign of recession in U.S and Europe?
Oil prices could see soft landing
Experts predict that lower oil prices would improve the chances of a soft landing for economies in both Europe and the US. The anticipated price drop would help central banks reduce rates and ease inflation pressures. The European Central Bank is expected to lower rates for the second time this month, while the US Federal Reserve is anticipated to begin its rate-cutting cycle soon.
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The potential $60 oil price could further reduce headline inflation rates and boost consumer disposable income, offering a rare positive amid global economic risks like trade conflicts and Chinese deflation concerns. Christof Ruehl from Columbia University’s Center on Global Energy Policy notes that lower oil prices would relieve inflationary pressures, which central banks urgently need.
Will oil prices decline in coming months?
Currently, oil prices, adjusted for inflation, are at levels last seen two decades ago. Analysts expect prices to decline further next year due to an oversupply and sluggish demand. The International Energy Agency projects global oil production will rise by 1.5 million barrels per day this year and next, exceeding demand growth by about 50%. This supply increase, despite OPEC+ production cuts, continues to exert downward pressure on prices.
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