The World Bank (WB) announces that global oil prices are likely to average $90 per barrel. This will occur in the fourth quarter of 2023. It is also likely to fall to an average of $81 per barrel in 2024.
In the latest “Commodity Markets Outlook” report, the price of oil has risen by just 6% since the start of the war between Israel and Hamas, while the prices of agricultural products, most metals and other commodities have “barely changed”.
The report presents three risk scenarios based on historical episodes involving conflict in the region since the 1970s, with increasing severity and consequences.
Average oil price to average $90 per barrel this year
“Scenario indicating a small disruption”
Equivalent to the reduction in oil production recorded in 2011 during Libya’s civil war of around 500,000 to 2,000,000 barrels per day (bpd) would lead to an oil price increase of between $93 and $102 per barrel in the fourth quarter of 2023.
“Scenario indicating a medium disruption”
Equivalent to the Iraq war in 2003 – would reduce global oil supplies by 3 to 5 million bpd, increasing the price of oil by $109 to $121 per barrel.
“Scenario indicating a large disruption”
Equivalent to the impact of the 1973 Arab oil embargo, it would reduce global oil supplies by 6 to 8 million bpd. Initially, in this scenario, the oil price would reach $140 – $157 per barrel.
“Higher oil prices, if sustained, will inevitably lead to higher food prices. If the severe oil price shock materializes, it will significantly affect food prices, which are already at a high level in many developing countries.,” said Ayhan Kose, deputy chief economist of the World Bank.
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