According to the financial institution, which outlined three possible scenarios regarding the developments of the conflict, the price of a barrel could reach a historical maximum of $150 if the war escalates into an even larger conflict in the coming months.
In this scenario of “great disruption,” the World Bank says it would be comparable to the effects of the Arab oil embargo carried out 50 years ago (specifically in 1973), during the Yom Kippur War.
In this case, there could be a reduction in the global supply of oil between 6 to 8 million barrels per day, which would raise prices to a range between $140 and $157 per barrel, a 75% increase.
“Higher oil prices, if sustained, inevitably mean higher food prices,” says Ayhan Kose, Deputy Chief Economist of the World Bank. “If a severe oil price shock materializes, it would raise inflation in food prices, which is already rising in many developing countries.”
Other scenarios
According to the World Bank, a slightly less chaotic scenario of “medium disruption” in the Middle East – something similar to the Iraq War in 2003 – would lead to a decrease in the global supply of oil between 3 to 5 million barrels per day, pushing prices to a range between $109 and $121 per barrel.
On the other hand, a scenario of “small disruption,” comparable to the civil war in Libya in 2011, would reduce the supply by 500,000 to 2 million barrels per day, leading prices to a range between $93 and $102.
According to the World Bank, the price of a barrel of oil in the fourth quarter of 2023 is expected to reach $90, before falling back to an average of $81. According to the bank, this represents an increase of about 6% since the beginning of the conflict between Israel and Hamas.
