World Bank: "Oil can reach the record of 150 dollars per barrel, if the Israel-Hamas war escalates"

Andrei Iacomi
English Section / 1 noiembrie 2023

World Bank: "Oil can reach the record of 150 dollars per barrel, if the Israel-Hamas war escalates"

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Brent crude was trading at around $88 yesterday

"The impact of the conflict on commodity markets should be limited, if it does not expand", according to the World Bank

The price of oil could reach $157 a barrel if the conflict between Israel and Hamas spreads beyond the borders of the Gaza Strip and the Arab oil embargo of 1973 is repeated, according to the World Bank's latest oil market outlook report. goods, according to CNBC.

According to data from the London Stock Exchange Group, the all-time high for oil prices was set in July 2008, when Brent rose to $147.5 a barrel. At 11:00 am yesterday, Brent crude was trading at $88.11 per barrel.

"In a "big disruption" scenario - comparable to the Arab oil embargo of 1973 - global oil supply would be reduced by six million to eight million barrels per day," according to the World Bank. "This would lead to an initial increase in prices of 56% to 75% - between $140 and $157 per barrel."

50 years ago, oil prices quadrupled after Arab energy ministers imposed an embargo on oil exports to the United States in retaliation for American support for Israel in the 1973 Arab-Israeli war, known as in Israel as the Yom Kippur War, according to CNBC.

The price projection is related to one of the three risk scenarios of the World Bank, according to estimates of different degrees of interruption of oil supply, based on previous historical episodes involving regional conflicts, the American publication also writes.

In the event of a "small disruption", global oil supply would see a reduction of 500,000 barrels to two million barrels per day, a drop similar to that seen during the Libyan civil war in 2011.

An "average outage" scenario would take three to five million barrels a day off the markets, driving oil prices between $109 and $121 a barrel. The situation would be roughly equivalent to the levels reached during the Iraq War in 2003.

According to the institution's baseline estimates, oil prices are expected to average $90 a barrel in the current quarter before falling to an average of $81 a barrel in 2024 as global economic growth slows. The implications of the conflict on commodity markets "should be limited" if the conflict does not expand, according to the bank's report, picked up by CNBC.

"The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s - Russia's war with Ukraine," said Indermit Gill, the World Bank's chief economist, adding that the conflict had disruptive effects on the economy. global that persist to this day.

Now, Israel and the Palestinian territories are not major players in the oil market, but the conflict is taking place in a larger, key oil-producing region. "If the conflict were to escalate, the global economy would face a double energy shock for the first time in decades - not just from the war in Ukraine, but also from the war in the Middle East," Gill said, according to CNBC.