Critical warning from the World Bank regarding oil prices: 'If the war continues...'

As the conflict between Hamas and Israel continues, a warning has come from the World Bank. The bank stated that if the conflicts in the Middle East spread, the price of a barrel of oil could exceed 150 dollars (4,243 Turkish Liras).

This situation could lead to a major increase in energy and food prices, approximately 1.5 years after the start of the Russia-Ukraine war.

COULD LEAD TO A 1970S-STYLE OIL CRISIS

The price of a barrel of oil, which is currently around 90 dollars, was expected to fall. However, according to the worst-case scenario in the new projections prepared by the World Bank, the situation in the Middle East could lead to an oil crisis similar to that of the 1970s. In October 1973, during the Yom Kippur War, Arab oil-producing countries cut off oil imports to the US and other countries that supported Israel, which led to a rise in prices.

'POLICYMAKERS MUST BE VIGILANT'

Commenting on the issue, World Bank Chief Economist Indermit Gill stated, “The latest conflict in the Middle East comes on the heels of Russia’s invasion of Ukraine, which triggered the biggest increase in commodity prices since the 1970s.”

Stating that the devastating effects of this war on the global economy are still being felt, Indermit Gill said that a period where both oil and gas supplies are disrupted has not been experienced for decades, and that policymakers must be vigilant.

'IF OIL PRICES REMAIN HIGH, FOOD PRICES WILL ALSO RISE'

The conflicts that began following Hamas's 'Al-Aqsa Flood' attack on Israel on October 7 had increased natural gas prices due to concerns that pipelines in the region could be affected. A similar rise had not been seen in oil prices.

In the World Bank's optimistic scenario, where conflicts in the Middle East do not spread, it is stated that the price of a barrel of oil will fall to 81 dollars. World Bank Economist Ayhan Köse also said, “If oil prices remain high for a long time, it will inevitably increase food prices.” Köse added, “In the event of a significant price increase, food inflation will rise in many developing countries – countries that are already struggling with higher food inflation. By the end of 2022, 700 million people, representing nearly 10 percent of the global population, were undernourished.”

News Source: 12punto