The World Bank said on Friday that the disruption of oil supplies if the conflict escalates in the Middle East could lead to a rise in global inflation rates.
The bank said in a report published today that a severe price disruption could lead to oil prices exceeding $100 per barrel, which would increase inflation in 2024 by about one percentage point.
He added that the continuation of geopolitical tensions over the past two years led to a rise in the prices of oil and many other commodities even as global growth slowed. For example, the price of Brent crude jumped to $91 per barrel earlier this month, about $34 per barrel more than the average for the 2015-2019 period.
The bank’s forecasts indicate that Brent crude prices will reach $84 per barrel on average in 2024 before falling to $79 on average in 2025, assuming there are no disruptions to oil supplies due to the conflict. But if conflict in the Middle East escalates, these unrest could push global inflation rates higher.
The report added, “If minor disturbances occur, it may lead to raising the average price of Brent crude to $92 per barrel during the current year.”
According to the report, severe unrest could lead oil prices to exceed $100 per barrel, raising global inflation in 2024 by about one percentage point.
The report also noted that the average price of gold – a popular choice for investors looking for a “safe haven” – is expected to reach a record level in 2024 before declining slightly in 2025.
Gold enjoys a special status among assets, and its price often rises during periods of uncertainty in geopolitical conditions and public policies, including conflicts.
The bank stated that, strong demand from several central banks in developing countries, coupled with increasing geopolitical challenges, is expected to boost gold prices throughout 2024.
The report indicates that the escalation of conflict in the Middle East could also lead to higher prices for natural gas, fertilizers and food, and the region is an important supplier of gas – 20% of the global trade volume of liquefied natural gas passes through the Strait of Hormuz.
The bank warned that if LNG supplies are cut off, fertilizer prices will also rise significantly, which will likely lead to higher food prices.
According to World Bank forecasts, food prices will generally fall somewhat – by 6% in 2024 and 4% in 2025. Fertilizer prices are expected to fall by 22% in 2024 and 6% in 2025.
The bank’s report pointed out that the acceleration of investment in green technology has led to a strengthening of the prices of key metals, which are critical to the global transition to clean energy.
Copper prices – the main component used in electricity grid infrastructure and the electric vehicle industry – rose to their highest level in two years this month, according to the report.
The World Bank added that it is expected to rise by 5% in 2024 before stabilizing in 2025. Aluminum prices are expected to rise by 2% in 2024 and 4% in 2025, supported in particular by the production of electric cars, solar panels and other products. Renewable energy infrastructure.
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