General view of Isfahan Refinery, one of Iran's largest refineries and considered the country's first refinery in terms of diversity of petroleum products in Isfahan, Iran on November 8 2023.
Fatemeh Bahrami | Anadolu | beautiful images
The World Bank warned on Thursday that the outbreak of a major conflict in the Middle East could trigger an energy shock that pushes oil prices above $100 a barrel, fueling inflation and leading to interest rates. higher for longer periods of time.
Tensions in the Middle East peaked earlier this month when Israel and OPEC member Iran appeared on the brink of war, raising fears that crude supplies could be disrupted.
The governments in Jerusalem and Tehran appear to have decided not to escalate after first exchanging direct attacks on each other's territory. Oil prices have fallen nearly 4% from recent highs as investors have discounted the possibility of a broader war in the region.
However, the World Bank warns that the situation remains uncertain.
“The world is at a vulnerable moment: A major energy shock could undermine much of the progress in reducing inflation over the past two years,” said World Bank chief economist Indermit Gill. ”.
According to the World Bank's latest commodity market outlook report, oil prices could average $102 per barrel if conflicts involving one or more oil producers in the Middle East lead to supply disruptions. supply 3 million barrels/day. According to the report, a price shock of this magnitude could almost completely hinder the fight against inflation.
According to the World Bank, global inflation cooled to 2% between 2022 and 2023 largely due to a nearly 40% drop in commodity prices. Commodity prices are currently stabilizing with the global financial institution forecasting a modest decline of 3% this year and 4% by 2025.
“Global inflation remains unbeaten,” Gill said. “A key driver of deflation – falling commodity prices – has essentially hit a wall. That means interest rates are likely to remain higher than currently expected this year and next.”
While conflict in the Middle East poses upside risks to prices, the world could see some relief if OPEC+ decides to start lifting production cuts this year. According to the World Bank, oil prices will fall to an average of 81 USD/barrel if this group brings 1 million barrels/day back to the market in the second half of this year.
