USA: Last week, oil prices experienced their worst week since the beginning of the year as a result of heightened concerns over the state of the world economy following the failure of two major U.S. banks and the almost-failure of Credit Suisse.

Despite the fact that most price predictions have been bullish in the short term due to positive oil fundamentals, things are starting to change. Fears of an economic slowdown, which would stifle demand and drive prices lower, are beginning to take the place of tight supply, which almost all forecasters cited as the primary factor in oil price rise predictions.

For the remainder of the year, Goldman Sachs has already updated its oil price forecast. The investment bank had previously predicted that Brent would reach $100 in the second half, but now projects that the global benchmark will only increase to $94 in the next 12 months. According to Goldman analysts, Brent crude will cost $97 per barrel in 2024.

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Given banking stress, recession fears, and an exodus of investor flows, oil prices have fallen despite the boom in China's demand, according to a note from Goldman last week, as reported by Bloomberg. Positioning and prices, particularly long-dated prices, historically only gradually recover after such traumatic events.

As far as events go, this one did indeed leave a lasting scar. West Texas Intermediate fell below $65 per barrel, while Brent crude dropped from over $80 to less than $75 per barrel. And all of this occurred despite recent predictions from reliable forecasters like the IEA and OPEC that demand growth would outpace supply growth.

41 percent of Americans, and for good reason, are getting ready for a recession, according to a recent CNBC report. Forecasts are not looking good, despite what seems like interminable media debates about whether the world's largest economy is already in a recession, is about to enter a recession, or will be able to avoid a recession.

"In reality, what you're observing is a marked tightening of financial conditions. Jim Caron, head of macro strategy for global fixed income at Morgan Stanley Investment Management, told CNBC earlier this month that the markets are correctly stating that this increases the risk of a recession.

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Equities are declining. Bond yields have decreased. Another query that comes to mind is: Will the three rate cuts that appear to be priced in actually occur? Caron said, "You can't rule it out.

Kemp predicted two likely outcomes, citing the cyclical nature of economic growth: one in which a recession starts earlier in the year as a natural result of the events of the previous two years, and another in which central bank-pumped growth results in even higher inflation, which then causes a slowdown amidst lower consumption.

If any of the scenarios play out, it will reduce oil demand as recessions typically do. And naturally, lower demand will cause oil prices to decline, albeit briefly. because, even during a recession, lower prices have a tendency to stimulate demand.

However, there is a crucial detail to note. The UK, EU, US, and Canada, as well as Australia, are the main countries targeted by the recession predictions. No one has mentioned a recession in China or India. As a result of their continued economic expansion, China and India will consume more oil this year. The supply of crude appears to be stagnating in the meantime.

However, just because oil demand from China and India, but especially China, is expected to increase this year does not mean higher oil prices are a foregone conclusion. This is because China's economy is heavily dependent on exports, and these exports will suffer if consumer countries experience a recession or something comparable.

Chinese oil demand predictions for this year are still at all-time highs. The largest importer in the world is expected to increase its demand by over 700,000 bpd this year, reaching a total of 15.56 million bpd, according to OPEC.

According to the IEA, increased Chinese demand will cause an oil market deficit in the second half of the year. However, all bets are off if a small recession somewhere reduces demand for anything coming from China.

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All price predictions call for higher prices towards the end of the year due to the fundamentals of oil. However, the foundation for these projections existed before the collapse of the banks and the rescue of Credit Suisse.

Hopefully the panic over baking will pass quickly and everything including expectations for oil demand will get back to normal. Or maybe the panic in the banking industry is a sign of even worse things to come things that will have an impact on demand for everything from crude oil to iPhones.

These factors, which are collectively referred to as a recession, might later in the year lead to some very different oil price forecasts.