On Monday, oil prices dropped to their lowest level in 15 months due to worries that uncertainties in the global banking sector might trigger a recession.

On Monday, oil prices dropped to their lowest level in 15 months due to worries that uncertainties in the global banking sector might trigger a recession, which would reduce demand for fuel, as well as anticipation of a possible increase in U.S. interest rates this week.

Brent oil futures decreased $2.32, or 3.2%, to $70.65 a barrel. Prior to that, the contract dropped to its lowest price since December 2021, which was $70.56.

West Texas crude for the United States fell $2.15 or 3.2% to $64.59 a barrel in April. It has previously dropped to $64.51, its lowest level since December 2021. The contract had its worst weekly decrease since last April last week, a 13% decline.

The decline in oil prices occurs despite a historic agreement that would see UBS, Switzerland's largest bank, acquire Credit Suisse, the nation's second-largest institution, in an effort to halt the development of a financial crisis.

After the statement, the European Central Bank, the U.S. Federal Reserve, and other significant central banks vowed to help other banks and provide market liquidity.

"The market focus is on present banking sector instability and the likelihood for future rate rises by the Fed," stated Baden Moore, National Australia Bank's head of commodity research.

Moore continued "Another major driver of the market outlook is the approaching OPEC meeting. Further price volatility raises the likelihood that OPEC may cut output even more to sustain prices," referring to the Organization of the Petroleum Exporting Countries.

The majority of the market experts surveyed by Reuters predict that the U.S. Federal Reserve will increase interest rates by 25 basis points on March 22 despite the recent volatility in the banking industry.

Yet, some business leaders are urging the central bank to temporarily halt tightening its monetary policy while preparing to resume hiking rates in the future. A pause in interest rate increases might weaken the dollar and make commodities like crude oil priced in dollars more attractive to holders of other currencies.

"This week is anticipated to be volatile, with general concerns about the state of the financial markets likely to stay prominent. Also, this week's FOMC meeting will only increase market uncertainty " ING Bank making reference to the US Federal Open Market Committee.

"Although we continue to anticipate a positive market trend throughout the year, we now see a lower probability of Brent reaching $100 per barrel."

On the 3^rd of April, the OPEC+ ministerial committee, which includes Russia as a producer ally, is scheduled to gather. On the 4^th of June, the full ministerial meeting is scheduled. In October, the group decided to reduce its daily oil output objectives by 2 million barrels through the end of 2023.

Meanwhile, Goldman Sachs lowered its predictions for Brent crude after the price fell due to concerns about the banking sector and the recession. The investment bank has decreased its prior prediction of $100 for Brent to $94 for the next 12 months and $97 for the second half of 2024.

(Bloomberg.com, Reuters.com)