--- title: "\"AI Doomsday Theory\" author issues another warning: Don't give up on interest rate cut bets! The Federal Reserve will ignore the impact of oil prices" type: "News" locale: "en" url: "https://longbridge.com/en/news/280539760.md" description: "James Van Gelderen warned that the surge in oil prices could have a severe impact on the economy, preventing the Federal Reserve from raising interest rates. As the war in the Middle East drives up oil prices, market expectations for rate cuts have reversed, with rates expected to remain unchanged and even a 17% chance betting on a rate hike. Van Gelderen believes that if oil prices remain high, the Federal Reserve may not raise interest rates, which could lead to an economic slowdown" datetime: "2026-03-26T00:24:06.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/280539760.md) - [en](https://longbridge.com/en/news/280539760.md) - [zh-HK](https://longbridge.com/zh-HK/news/280539760.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/280539760.md) | [繁體中文](https://longbridge.com/zh-HK/news/280539760.md) # "AI Doomsday Theory" author issues another warning: Don't give up on interest rate cut bets! The Federal Reserve will ignore the impact of oil prices According to Zhitong Finance APP, over a month ago, James van Geelen, founder of Citrini Research, unexpectedly became a global focus due to a report titled "2028 AI Doomsday Prophecy." This 7,000-word report outlines the risks that AI may pose to various sectors of the global economy by setting hypothetical scenarios for the future, perfectly aligning with Wall Street's most severe concerns—at that time, investors were selling off stocks of any companies that could potentially be replaced by AI. Now, he is betting that another wave of panic-driven selling—this time in the bond market—has gone too far. As the war in the Middle East has triggered a surge in oil and commodity prices, there is an urgent risk that the economy could suffer a shock reminiscent of the 1970s, forcing central banks to start raising interest rates to prevent the possibility of runaway inflation, which has led to a significant drop in global bond prices. In the United States, as traders abandoned bets on interest rate cuts, U.S. Treasury bonds experienced their largest decline since October 2024 this month. It is reported that before the outbreak of the Middle East war, the market expected the Federal Reserve to cut interest rates at least twice this year, with nearly a 40% probability betting on more substantial easing, according to the FedWatch tool. However, with rising oil prices, this expectation has completely reversed—the market now anticipates that interest rates will remain unchanged this year, with a 17% probability betting on rate hikes. However, van Geelen stated in an article on Wednesday that the surge in oil prices is likely to bring about a new and sufficiently severe shock to the economy, thereby preventing the Federal Reserve from raising interest rates. He said, "If oil prices remain high, then simply keeping interest rates at current levels is already restrictive enough. Meanwhile, oil prices will gradually transmit to other areas of the economy, leading to an economic slowdown that can be addressed through rate cuts." Van Geelen predicts that the Federal Reserve will ignore the impact of oil prices and is unlikely to raise rates. He believes that if the war is resolved within a month, "consumers will be slightly weakened," but concerns about inflation will dissipate. If the war continues, he predicts that stock prices will fall, "the wealth effect will lead to an economy that is too weak for the market to believe that the Federal Reserve will not cut rates in the next 12 months." He stated that his company is buying three-month futures contracts on secured overnight financing rates and shorting U.S. stocks. If the economy is severely impacted, both bets will be profitable. These views indicate that he has joined other Wall Street institutions in predicting that a slowdown in the U.S. economy may overshadow inflationary effects. For example, Castle Securities stated this week that the "demand destruction" caused by rising energy costs could support certain segments of the bond market. Pacific Investment Management Company (Pimco) also indicated that central banks may ultimately still cut rates. As the Middle East war continues, some signs suggest that this viewpoint is beginning to be accepted by the market. On Wednesday, U.S. Treasury yields fell slightly—previously, European bond yields had dropped more significantly—although the futures market still reflects a certain probability of the Federal Reserve raising rates this year. The last time a war pushed energy prices higher was after the outbreak of the Russia-Ukraine conflict in 2022, when the Federal Reserve did indeed tighten monetary policy afterward. However, at that time, inflation was already rising rapidly as the economy rebounded strongly from the pandemic. Van Geelen stated, "We are living in a different world now." ” ### Related Stocks - [Occidental Petroleum Corporation (OXY.US)](https://longbridge.com/en/quote/OXY.US.md) - [SttStrtSPDRS&POil&GasExplor&ProdtnETF (XOP.US)](https://longbridge.com/en/quote/XOP.US.md) - [The Energy Select Sector SPDR® ETF (XLE.US)](https://longbridge.com/en/quote/XLE.US.md) - [United States Oil (USO.US)](https://longbridge.com/en/quote/USO.US.md) - [iShares US Oil Equipment & Services ETF (IEZ.US)](https://longbridge.com/en/quote/IEZ.US.md) - [iShares Global Energy ETF (IXC.US)](https://longbridge.com/en/quote/IXC.US.md) - [Vanguard Energy ETF (VDE.US)](https://longbridge.com/en/quote/VDE.US.md) - [Stt Strt®SPDR®S&P®Oil &GasEqpmnt&SvcsETF (XES.US)](https://longbridge.com/en/quote/XES.US.md) - [ProShares Ultra Bloomberg Crude Oil (UCO.US)](https://longbridge.com/en/quote/UCO.US.md) - [iShares US Oil & Gas Explor & Prod ETF (IEO.US)](https://longbridge.com/en/quote/IEO.US.md) - [VanEck Oil Services ETF (OIH.US)](https://longbridge.com/en/quote/OIH.US.md) - [VanEck Oil Refiners ETF (CRAK.US)](https://longbridge.com/en/quote/CRAK.US.md) - [United States Brent Oil (BNO.US)](https://longbridge.com/en/quote/BNO.US.md) ## Related News & Research - [CERAWEEK-Devon Energy to hold activity steady even as oil prices spike, CEO says](https://longbridge.com/en/news/280501527.md) - [Stock Futures Fall as Investors Monitor Oil Prices, Updates on U.S.-Iran Conflict](https://longbridge.com/en/news/279945016.md) - [Energy Down With Oil Futures on Peace Hopes -- Energy Roundup](https://longbridge.com/en/news/280530388.md) - [Warren Buffett Bought 8 Million Shares of This Oil Giant and $100 Oil Proves Him Right](https://longbridge.com/en/news/279996030.md) - [Shell leads 2nd consecutive day of fuel hike, diesel price up by 20 cents](https://longbridge.com/en/news/280269598.md)