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World Bank warns of oil price shock if unrest spreads across Middle East

October 31, 2023 at 12:29 pm

World Bank’s chief economist, Indermit Gill [@IndermitGill/X]

The World Bank yesterday warned of a potential shock in commodity prices, specifically oil and agricultural products, if Israel bombing of Gaza escalates and the unrest spreads across the region.

The World Bank’s chief economist, Indermit Gill, highlighted the significant effect of the current situation on commodity markets, explaining that it comes right after Russia’s war on Ukraine which caused the biggest shock to commodity markets since the 1970s. He emphasised that the disruptive effects of the war on the global economy can still be felt to this day.

Gill further called for caution saying: “Policymakers will need to be vigilant. If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades—not just from the war in Ukraine but also from the Middle East.”

The World Bank stated that the extent of the potential price increase would depend on the impact on global oil prices and exports. In an optimistic scenario, oil prices could rise by three to 13 per cent, ranging between $93 and $102 per barrel. However, in the worst-case scenario, oil could peak at between $140 and $157.

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