Oilprice: because of low oil prices the world faces a recession

Oilprice: because of low oil prices the world faces a recession


The slide of the world economy into a recession accompanied by the usual phenomena like the fall of the rate of production and reduce corporate profits, but that the causes of the decline were low oil prices, is unusual, says expert Oilprice.com James Hamilton.

MOSCOW, 26 Jan. The world is waiting for a new recession (a downturn in the economy — as amended), and this time it’s due to the fall in oil prices, says economic analyst Oilprice.com James Hamilton.

“The global economy slides into recession. Signs of this are evident in the usual things: declining production, a decline in purchasing power, the increase in credit spreads (difference between prices of orders for sale and purchase — ed.) and commodity-material assets, lower corporate profits, expectations of inflation and investment. But this is most unusual recession — the first that caused by the fall in oil prices,” he writes.

Analyst says USA example on why low oil prices negatively affect the market. “When oil prices fall, US shares also fall. That is, it is assumed that this is bad news for the market, not good,” he explains.

According to him, particularly the strong impression the relationship of the fall in oil prices and the recent collapse of the Chinese stock market. The situation in China, says Hamilton, is one of the main factors that could further reduce oil prices in the case of the global recession. This should cause concern among U.S. oil-producing States, he said.

The economist draws attention to such a negative for the U.S., a factor associated with low oil prices, unemployment. From the perspective of Hamilton, a problematic situation for the oil sector will lead to higher unemployment, which affects not only the individuals involved in this industry. It is including those who work in all the service companies serving the oil sector and the providers of these services.

About the new wave of financial instability that might threaten the entire world, recently on the eve of the economic forum in Davos warned William white, in his time who predicted the crisis of 2008. In his view, because of the widespread growth of private and public debt the world will cover a wave of defaults.