Oil prices could reach 'uncharted waters' if the Israel-Hamas war escalates, the World Bank says
abcnews.go.comThe World Bank says oil prices could be pushed into “uncharted waters” if the violence between Israel and Hamas widens
WASHINGTON — The World Bank reported on Monday that oil prices could be pushed into “uncharted waters” if the violence between Israel and Hamas widens, which could result in increased food prices worldwide.
The World Bank’s Commodity Markets Outlook found that while the effects on oil prices should be limited if the conflict doesn’t expand, the outlook «would darken quickly if the conflict were to escalate.»
The attack on Israel by the militant organization Hamas and the ensuing Israel military operation against Hamas have raised fears of a wider Mideast conflict.
And the threat of escalation looms. Israeli tanks and infantry pushed into Gaza over the weekend as Israeli Prime Minister Benjamin Netanyahu announced a “second stage” in the war. Hamas officials have called for more regional assistance from allies, including Iran-backed Hezbollah in Lebanon.
The World Bank report simulates three scenarios for the global oil supply in the event of a small, medium or large disruption.
Effects should be limited if the conflict doesn’t widen in a “small disruption” scenario — as oil prices are expected to decline from current levels of roughly $90 a barrel to an average of $81 a barrel next year, the World Bank estimates.
But during a “medium disruption” — equivalent to the disruptions experienced during the Iraq war — the global oil supply of about 100 million barrels a day would decline by 3 million to 5 million barrels per day, driving oil prices up possibly by 35%.
In a “large disruption” scenario — comparable to the Arab oil embargo of 1973 — the global oil supply would shrink by 6 million to 8 million
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