World Bank alerts of possible major oil price hike

The Israeli war on Gaza has caused the World Bank to warn that oil prices could rise to as much as $157 per barrel, up from $90. 

The bank’s Commodities Outlook Report, which was released on Monday, includes the warning. Growing oil prices will affect fertilizer prices, which will raise food inflation in addition to energy and fuel costs. More than 700 million people, or nearly 10% of the global population, are already undernourished, and this would make matters worse for them.

Under the bank’s baseline scenario, which it set out before the war, oil prices were predicted to fall to around $81 per barrel while overall commodity prices were projected to decline by 4.1 percent next year.

These forecasts have been thrown into disarray by the war on Gaza and the prospect of an even wider conflict, possibly an attack on Iran, which has been a long-held objective of the US, and which has come closer to realization with the movement of naval and air forces into the Gulf.

The World Bank said the outlook for commodity prices would “darken quickly” were the conflict to escalate. It set out three possible scenarios.