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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Oil Prices Slide As IMF Sees Global Economy Teetering On The Brink

  • IMF slashes global GDP growth forecasts for this year, to 3.2%.
  • Tighter monetary policy weighs on global growth forecasts.
  • WTI crude swung from a gain to a 1% loss on the day.

Crude oil prices fell on Tuesday as the International Monetary Fund warned that high inflation and the Russian-Ukraine war could send the global economy to the brink of a recession.

In an update to its World Economic Outlook, the IMF also slashed global GDP growth forecasts for this year, to 3.2%, as GDP already contracted in Q2. The new estimate is down from its forecast of 3.6% made in April.

At 1:36 p.m. ET, WTI was trading at $95.73, down $0.97 (-1.00%) on the day. Brent crude slipped to $104.80, down $0.31 (-0.29%) on the day, with a wide gap between the two benchmarks.

The IMF’s view of 2023 on the back of tighter monetary policy was also downgraded to 2.9%--down from its estimate of 3.6% made in April.

"The outlook has darkened significantly since April. The world may soon be teetering on the edge of a global recession, only two years after the last one," the IMF Chief Economist Pierre-Olivier Gourinchas said at a Tuesday news conference, according to Reuters.

The IMF cautioned that its forecasts were “extraordinarily uncertain” with even more downside risks possible courtesy of higher energy and food prices as a result of the war in Ukraine—a recipe that could worsen inflation and trigger even more monetary policy tightening.

In a worse-case—yet “plausible” scenario, Russia could halt gas flows to Europe completely by year end, along with another 30% drop in Russian oil exports, slowing GDP growth even further to 2.6% this year and 2% nextc year.

For 2022 inflation in advanced economies, the IMF sees it reaching 6.6%--up from 5.7% that it predicted in its April forecast.

By Julianne Geiger for Oilprice.com

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Leave a comment
  • Dennis on July 26 2022 said:
    yep when fuel prices go up everything else goes up and people quit spending and stock market crashes. hmm not a rocket scientist but this is what happens every time how about a happy median where oil field people can work and everyone has a job. I don't mind paying for gas but don't rob me like we are being robbed now
  • Mamdouh Salameh on July 26 2022 said:
    The IMF is excessively pessimistic in its projections of the global GDP growth in 2023. In the current circumstances, a 2.9 % growth is still relatively healthy enough.

    A recession in normal circumstances does indeed lead to a shrinking of the economy and oil demand destruction. But we are in very unusual circumstances of shrinking global production capacity and tightness in the market. In such circumstances, recession could hardly lead to demand destruction since there is hardly enough supply to destroy. So we end up with a unique form of recession where demand and prices continue to surge and the global economy continues to shrink.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

Leave a comment




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