Oil Market –Prices of crude oil could move up past $150 per barrel amid escalated war in oil rich nations.
Ft.com article reported that the Middle East, which plays key in producing world commercial fuel is making things not better for global markets
The World Bank warned on Monday October 30 that world is risking a repeat of the 1970s oil price shock if key producers cut supplies.
In its quarterly Commodity Markets Outlook, the multilateral lender said a prolonged Israel-Hamas conflict could drive big rises in energy and food prices in a “dual shock” for commodity markets still reeling from Russia’s full-scale invasion of Ukraine.
“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 and senior vice-president for development economics as quoted in the Ft.com.
Under the bank’s baseline forecasts, overall commodity prices are predicted to fall 4.1 per cent in the next year, with oil prices declining to an average of $81 a barrel, down from a projected $90 a barrel in the current quarter, as economic growth slows.
However, the report said this outlook could quickly reverse if the conflict in the Middle East intensifies. In a worst-case scenario, global oil supply could shrink by 6mn to 8mn barrels a day, sending prices to between $140 and $157 a barrel, if leading Arab producers such as Saudi Arabia moved to cut exports.
The report added that, under small and medium disruption scenarios, prices could hit $102 to $121 a barrel.
The war began when Hamas launched cross-border attacks from Gaza on October 7, killing more than 1,400 people and taking more than 230 hostages, according to Israeli officials.
In a freak retaliation that shows no signs of calming down anytime soon, the Israeli bombardment has since killed more than 8,000 people in Gaza and injured more than 20,000, according to Palestinian officials.
This conflict threatens to spread beyond Israel and the occupied Palestinian territories, with energy analysts warning that global exports could be hit if leading crude producers such as Iran also became actively involved.
