Causes of recessions

PARAGRAPH 1 --- What happened: Oil price shocks have historically preceded recessions, as seen in the 1973 OPEC embargo and the 2008 financial crisis. However, it's not the price spike alone that causes recessions; rather, it's the underlying economic vulnerabilities that are exposed and exacerbated by these shocks.

PARAGRAPH 2 --- Market impact: Oil-intensive industries and companies with high debt levels are particularly vulnerable. Higher oil prices increase production costs, squeezing profit margins. Additionally, consumers and businesses may cut back on spending, leading to reduced economic activity.

PARAGRAPH 3 --- What to watch next: Keep an eye on the following catalysts:
- The U.S. Energy Information Administration's (EIA) Short-Term Energy Outlook, released quarterly, for updates on oil price projections and their potential impact on the economy.
- The next OPEC meeting, scheduled for June 2023, where production policies will be discussed, potentially influencing global oil prices.
- The U.S. Federal Reserve's interest rate decisions, as higher rates increase borrowing costs, which could exacerbate economic vulnerabilities.