News
Yikes! Oil Prices could Skyrocket
Dana Malcolm
Staff Writer
November 15, 2023 – A new report from the World Bank is warning that if full-scale conflict between Israel and Hamas breaks out oil prices could soar to record highs. In an October 30th Commodity Markets Outlook the World Bank said any escalation in the Middle East coupled with the Russia-Ukraine conflict could ‘push global commodity markets into uncharted waters’
The outlook for the price of goods would ‘darken quickly’ the organization says reducing oil supply by 500,000 to 2 million barrels per day and pushing prices up by 13 percent to a possible $102 per barrel. That is in the case of a low-scale disruption.
“In a “large disruption” scenario—comparable to the Arab oil embargo in 1973— the global oil supply would shrink
Despite the warning, there was favorable news in the report as well. So far the conflict has not shaken global consumer prices much, other than oil which has moved up about 6 percent. On the chance that the conflict does not widen here is what’s in store for global consumers under the Bank’s baseline forecast:
- Oil prices are expected to average $90 a barrel in the current quarter before declining to an average of $81 a barrel next year as global economic growth slows.
- Overall commodity prices are projected to fall 4.1%in 2024.
- Prices of agricultural commodities are expected to decline next year as supplies rise.
- Commodity prices are expected to stabilize in 2025.
The UK, US, France, and other wealthy countries have vowed support for Israel. Over a hundred countries have called for an immediate sustained humanitarian truce in a UN Resolution adopted on October 26th. A total of 120 countries voted in favor, 14 against, with 45 abstentions.
Israel, the US, Fiji, Guatemala, the Marshall Islands, Micronesia, Nauru, Papua New Guinea, Paraguay, and Tonga voted against the resolution.
The report comes as Israel has now begun a ground invasion into Gaza.