The World Bank said on Monday that the escalation of the conflict in the Middle East may raise oil prices in the fourth quarter of this year.
Although the global economy is in a much better position than it was in the seventies to deal with a major shock in oil prices, the recent escalation of the conflict in the Middle East – which comes on top of the turmoil caused by the Russian invasion of Ukraine – could push global commodity markets into uncharted territory, according to the latest Commodity Market Outlook report released by the World Bank.
The report provides a preliminary assessment of the potential impact of the conflict on commodity markets in the near term. He believes that the effects should be limited if the conflict does not expand. According to the bank’s basic forecast, oil prices are expected to average 90 dollars per barrel in the current quarter before falling to an average of 81 dollars per barrel next year as global economic growth slows.
He predicted that commodity prices in general will fall by 4.1% next year. Agricultural commodity prices are estimated to fall next year as supplies rise. As well as an expected decline in base metal prices by 5% in 2024. Commodity prices are expected to stabilize in 2025.
The effects of the conflict on global commodity markets have so far been limited. Overall, oil prices have risen by about 6% since the beginning of the conflict. Prices for agricultural commodities, most metals and other commodities barely moved.
The outlook for commodity prices will quickly become darker if the conflict escalates. The report identifies what could happen under 3 risk scenarios based on historical experience since the Seventies. The effects will depend on the degree of disruption of oil supplies.
