Increasing conflict in Gaza and its spread to other parts of West Asia could lead to a sharp rise in commodity prices. Especially oil prices may rise, which may also affect food prices. The World Bank estimates that crude oil will trade at around $90 per barrel this quarter. At the same time, the price for the year is estimated to be $84 per barrel.
Crude prices may increase by 75%
According to World Bank report, in a worst-case scenario, prices may increase by $67 per barrel or reach around $157 per barrel. If the global supply of crude falls by 6-8 percent, prices may increase by up to 75 percent.
Increase in conflict may also affect food supply and their prices may rise. Apart from this, due to higher transportation cost, there may be a rise in the prices of industrial metals as well as gold.
Market conditions are different
The Commodity Market Outlook states that the current market conditions are quite different, with oil intensity (the volume of oil consumed per unit of GDP) falling to 0.05 tonnes of oil equivalent. It is expected to decline further as renewable energy increases. Apart from this, strategic reserves created by countries, development of oil futures and diversified sources have helped a lot.
Crude oil prices are influenced by geopolitical events, supply and demand dynamics, economic indicators, currency fluctuations, and global political stability.
The conflict in Gaza has the potential to disrupt oil markets, leading to a rise in crude oil prices. Geopolitical tensions often create uncertainty, impacting the global supply and demand balance.
Higher crude oil prices can have a cascading effect on other commodities. Increased transportation costs may contribute to rising prices in sectors such as food, industrial metals, and gold.
Crude Oil reached an all time high of $147.27 in July of 2008.