The expert revealed the reason for the fall in world oil prices

MOSCOW, 26 Sep — PRIME. The fall in oil prices in the world below $84 per barrel was caused by the expectation of a decline in business activity associated with the tightening of the monetary policy of the United States and other countries, Alfa Capital analyst Alexander Dzhioev told RIA Novosti.

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1 Oil falls in price on fears of a global recession

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Oil falls in price on fears of a global recession

On Monday, the price of December futures for Brent crude fell below $84 per barrel for the first time since mid-January. November futures were below $78. As of 15.19 Moscow time, the cost of Brent is $84.06, the American WTI is $77.83.

“The correction of oil quotes was caused by rising rates, tightening of monetary policy in the United States. Recall that last week the Fed once again went on an increase of 75 basis points. This means that the cost of borrowing money will increase even more for businesses and the public, which negatively affect business activity,” the expert said.

“A decrease in business activity will lead to a reduction in aggregate demand, including for raw materials. It is precisely because of the expected decline in business activity that we see a drop in oil prices,” the expert added.

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This week, a number of world central banks raised their key rates. The US Federal Reserve System (FRS) raised the rate by 75 basis points – up to 3-3.25% per annum. The Bank of England raised the rate by 50 basis points to 2.25%, the National Bank of Switzerland – by 75 basis points to 0.5% per annum, setting a positive discount rate for the first time since 2014.