The December issue of the World of Petroleum and Bitumen
The World Bank warned that rising tensions in the Middle East may push petroleum prices above $100 per barrel and reverse the recent downward trend in global inflation.
The Washington-based financial institution announced that the recent drop in commodity prices even before the recent developments in the Middle East had found a uniform trend and made it difficult for central banks to decide to cut interest rates.
Earlier, the World Bank predicted that the average price of a barrel of crude oil this year will reach 84 dollars. According to the World Bank’s Commodity Markets Report, the mild disruption of petroleum supply caused by geopolitical tensions may increase the price of Brent oil to $92 per barrel this year, but in case of a more severe supply disruption, the price of petroleum will rise above $100 per barrel and increase global inflation by 1 percent in 2024.
Between the middle of 2022 and the middle of 2023, global commodity prices decreased by about 40%, which was the main factor of the decrease of about 2% in the global inflation rate during the same period. According to the World Bank report, since the middle of 2023, the commodity price index of this institution has remained largely unchanged.
In response to the more sticky inflation than expected, the financial markets have adjusted their expectations about the extent and trend of interest rate cuts this year.
World Bank’s Chief Economist, 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.”
According to the Guardian report, the World Bank announced that the escalation of geopolitical tensions could also increase the price of natural gas, fertilizer and food.
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