Israel-Hamas war: Oil prices could see 'large increases' if conflict spreads, World Bank warns

Israel-Hamas war: Oil prices could see 'large increases' if conflict spreads, World Bank warns

The World Bank is warning Monday that the prices of oil and other commodities could see "large increases" if the Israel-Hamas war spreads through the Middle East.

The Washington-based institution said in its October 2023 Commodity Markets Outlook report that despite commodity markets responding "calmly" to the war, "historical precedent" suggests that escalating conflict in the region could substantially disrupt commodity supply.

"Although neither Israel nor Gaza is a major energy producer, an escalation of the conflict and its spread to the wider region could lead to large increases in the prices of oil and other commodities," the report says. "Historical precedent also indicates this could have destabilizing implications for the global economy. Moreover, spillovers to food prices could exacerbate food insecurity in conflict-afflicted areas in the region and around the world."

If that happens, depending on the level of impact to the global oil supply, the World Bank says prices per barrel could rise from the 2023 Q4 baseline forecast of $90 a barrel to around $102 in a "small disruption scenario" to as much as $157 a barrel in a "large disruption scenario."