Week 1 Active Assignment

The Impact of Monetary Policies on Global Oil Markets: An Analysis Your Name Subject and Section Professor’s Name May 11, 2024 As seen from the Reuters report, the current oil price plunge represents a dramatic relationship between monetary policy, business activity, and commodity markets. The report underlines a nearly one-dollar drop in oil prices after the Fed officials' private comments hint at high interest rates' staying. This paper is going to show the reasons that are responsible for the decline in oil prices. It will deal with the global as well as geopolitical consequences, and it will look for historical similarities. Background Context The prices of crude oil follow a variety of complex factors, among which there are regular demand and supply balances, tensions between geopolitics, and macroeconomic measures. The interest rate policies of the Federal Reserve are pillars on which the conduct of economic activities, in turn, depend. High interest rates are more likely to lead to decreasing economic growth since they tend to increase the cost of borrowing, and so demand for commodities like oil may slow down (Kang, 2023). This link puts little emphasis on understanding monetary policies as you analyze commodity markets, which emphasizes their significance. Analysis of Current Events The FED official's comments demonstrate a policy of elevated interest rates to project to their inflation targets and, consequently, affect the domestic oil demand as the U.S. is the largest oil consumer globally. The ensuing solidity of the U.S. dollar, which oil that is indexed to dollars is denominated in, is costly, particularly for non-dollar holders, who could go on subduing international demand even more (Fantacci & Gobbi, 2023). Furthermore, the article says that the other following oi...