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NEWS: The World Bank expects oil prices to rise if the conflict escalates in the Middle East
First published: 30-Oct-2023 19:53:22
The World Bank expects that the escalation of the conflict in the Middle East may push global oil prices to rise, expecting prices to average $90 per barrel in the last quarter of 2023, and $81 per barrel on average next year as the pace of global economic growth slows, according to a report by the bank issued on Monday. Monday.
This comes as the current conflict between the Palestinian Hamas movement and Israel has exceeded its third week, as the Israeli army launches a military operation against the movement in response to a sudden armed attack launched by Hamas on October 7 against Israel. The conflict left thousands dead and injured.
The World Bank said, in its report, that the effects of the conflict on global commodity markets are limited so far, adding that oil prices have generally risen by about 6% since the beginning of the current conflict.
But he noted that the outlook for commodity prices would quickly turn negative if there was an escalation in the conflict.
Price rise scenarios
The World Bank expected 3 scenarios for risks to the oil market, the effects of each of which will depend on the degree of disruption to oil supplies, and these scenarios are based on previous conflicts in the region.
1 - The “simple disruption” scenario, in which global oil supplies will decrease by 500,000 barrels to two million barrels per day, and the price of oil will initially rise between 3% and 13% compared to the average of the current quarterly period by $93 and $102 per barrel.
2- - The “moderate disruption” scenario, where global oil supplies will decline by between 3 million and 5 million barrels per day, with prices rising by 21% to 35% initially, at $109 and $121 per barrel.
3- The “Great Disruption” scenario, in which global oil supplies will shrink by 6 million to 8 million barrels per day, pushing prices to rise by 56% to 75% initially, at $140 and $157 per barrel.
The World Bank said in its report that the minor effects of the current conflict so far on commodity prices may reflect an improvement in the global economy’s ability to absorb oil price shocks.
Meanwhile, Ayhan Kosi, Deputy Chief Economist and Director of the Development Prospects Group at the World Bank, said, “The continued rise in oil prices inevitably means a rise in food prices, and if a severe shock occurs in oil prices, it will lead to higher inflation rates in food prices, which are already high in many countries.” developing countries,” according to the report.
This comes as oil prices fell by more than 2% on Monday - the 24th day of the conflict - with declining fears about the impact of the war between Israel and Hamas on supplies from the region, and investors warned before the US Central Bank meeting this week, according to Reuters.
(Prepared by: Jehan Laghmari, Edited by: Maryam Abdel Ghani, Contact: email@example.com)
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