Israel-Hamas War: World Bank warns of hike in global commodity and crude oil prices

Israel-Hamas war: As the Israel-Hamas war rages on, the World Bank has warned that the global commodities and crude oil prices will go up. It further mentioned that the turmoil in the energy market could impact food security as well.

Commodity Markets Outlook

As per World 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. The overall commodity prices are forecasted to fall 4.1% next year. The prices of agricultural commodities and base metals are expected to decline next year. The price of base metal is projected to fall 5% in 2024, while the decline in agricultural commodities will be due to supply rise.

Also Read:Israel's economy to plummet 11% amidst Hamas war: JPMorgan report

The bank listed out three scenerios of disruption and its impact on the commodity market.

1. Small disruption scenerio -  The global oil supply would be reduced by 500,000 to 2 million barrels per day and prices would initially increase between 3% and 13% relative to the average for the current quarter—-to a range of $93 to $102 a barrel
2. Medium disruption scenerio - The global oil supply would be curtailed by 3 million to 5 million barrels per day, which would drive oil prices up by 21% to 35% initially—to between $109 and $121 a barrel
3. Large disruption scenerio - The global oil supply would shrink by 6 million to 8 million barrels per day, which would in turn push up prices up by 56% to 75% initially, to between $140 and $157 a barrel

The oil prices since the start of the war have risen about 6%, while the prices of agricultural commodities, most metals, and other commodities have remained largely constant so far.