The World Bank has stated that oil prices could surge to $100 a barrel due to rising tensions in the Middle East.
The news comes as the Israeli government has been headstrong in its approach to resolving concerns in Palestine. Resulting in a rising death toll, humanitarian aid crisis, and war on the borders of the country, a stark reality.
The United States-based World Bank cautions that the current unrest in the region, with its unpredictable nature, will likely lead to inflation being a constant in Americans’ lives and potential oil price hikes due to global economic uncertainty.
World Bank issues concerns.
Interest rate decisions have become more difficult due to the fall in commodities pricing stalling and the unrest in major pipelines throughout the Middle East.
The region supplies 20% of global liquefied natural gas (LNG) via the Strait of Hormuz. Brent crude oil reached $91 per barrel earlier in April, compared to the 2015-2019 average of $34 more.
The World Bank’s projections put a barrel of oil at $84 in 2024, hoping that this slows to $79 by 2025. This depends entirely on no combat and conflict-related disruptions to the world’s oil supply chain.
World Bank Group’s Chief Economist and Senior Vice President, Indermit Gill, said, “Global inflation remains undefeated. A key force for disinflation—falling commodity prices—has essentially hit a wall. That means interest rates could remain higher than currently expected this year and next. The world is at a vulnerable moment: a major energy shock could undermine much of the progress in reducing inflation over the past two years.”
Mr Gill says this major energy shock is due to the persistence of raging geopolitical tensions over the past two years. These tensions drive up the price of key commodities and put fossil fuel prices on the higher end due to the erratic nature of the Middle East crisis.
If tensions continue, global inflation could rise by 1%, raising oil prices to a high not seen since the early 2000s. This would be well over the worst-case scenario of $100 a barrel of oil for Americans.
Image: Ideogram.
