Why did the price of crude oil fall below the $1 mark? This is determined by three mainstream factors.
1. Expectation of US dollar interest rate hike
Although the Federal Reserve recently announced the largest rate hike in 11 years, with a one-time rate hike of 75 basis points, keeping the federal interest rate between 1.5% and 1.75%, the inflation rate in the United States is still high. The latest data shows that the inflation rate in the United States reached 8.6% in that month, which is far from the expected target of 2% by the Federal Reserve.
In order to curb economic overheating, the market thinks that the Fed is likely to keep the pace of raising interest rates. Some experts predict that the US federal interest rate may reach around 4%. According to this forecast, there is still a lot of room for the US dollar to raise interest rates, which has a great impact on the international futures market and suppressed the rise in crude oil prices.
2. The situation of the Russian-Ukrainian war is unknown
After the outbreak of the Russian-Ukrainian war, the market was initially expected to end in about three months, but it has lasted for nearly half a year and there is still no sign of ending.
With the intensification of geopolitical conflicts, the sanctions imposed by the United States and the European Union on Russia have spread from energy to gold and other products. Many countries in the European Union refused to buy Russian oil and natural gas, but the United States secretly bought cheap crude oil from www.cszy.net, Russia, which also put pressure on crude oil producers such as the Middle East and released domestic crude oil reserves, which had a certain impact on the international crude oil market supply.
The United States takes advantage of the impact of the Russian-Ukrainian conflict to control the price of crude oil, so as to maintain the control of the US dollar over oil, and to some extent, it can protect the hegemonic position of the US dollar, and crude oil will fluctuate with the trend of the US dollar.
3. COVID-19 epidemic affects global economic recovery
Although all countries in the world are trying to get rid of the impact of COVID-19 epidemic, Covid-19 is still the biggest obstacle to global economic recovery so far, and the constant variation of the virus has brought a shadow to global economic recovery. A new variant of Omicron strain with the number BA.2.75 has been detected in 8 countries including Indian, Japanese and American. This ever-changing virus warms up the market risk aversion and affects the global economic recovery.
According to statistics, the global economic losses caused by the COVID-19 epidemic and the COVID-19 epidemic are 5.8 trillion to 8.8 trillion US dollars, which is equivalent to 6.4% to 9.7% of the global GDP. The COVID-19 epidemic has cost the world 255 million jobs and 2.5 million years of life expectancy.
COVID-19 epidemic affects the global economic recovery, which has long-term constraints on oil demand. When other factors are superimposed, it will have a negative impact on crude oil prices.
In short, the rise in oil prices was closely related to the global economic stimulus plan. In the case of weak economic recovery, it was difficult to maintain economic prosperity simply by printing money. It is reasonable that the US dollar interest rate hike superimposed the COVID-19 epidemic and the Russian-Ukrainian conflict, which made the already high oil price lose support and the international crude oil price fell below the $1 mark.