Escalation of Israel-Hamas war into Middle East-wide conflict would disrupt oil supplies and stoke food prices, says Bank
Oil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict in the Middle East witnessed 50 years ago, the World Bank has warned.
In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.
A “small disruption” scenario, in which the global oil supply would be reduced by 500,000 to 2m barrels a day -roughly equivalent to the reduction seen during the Libyan civil war in 2011. The oil price would rise to a range of $93 to $102 a barrel.
A “medium disruption” scenario – roughly equivalent to the Iraq war in 2003 – where the global oil supply would be reduced by 3m to 5m barrels a day. Oil prices would rise by 21% to 35% initially, taking them to between $109 and $121 a barrel.
A “large disruption” scenario-comparable to the action taken during the Yom Kippur war of 1973 – in which the global oil supply would shrink by 6m to 8m barrels a day, resulting in a 56% to 75% increase in prices to between $140 and $157 a barrel.
