World Bank warns oil price could soar to record $150 a barrel

News: World Bank warns oil price could soar to record $150 a barrel

Summary:
  Oil prices could soar to a record high of more than $150 a barrel if the war between Israel and Hamas leads to a repeat of the full-scale conflict.
  In the first major assessment of the economic risks of an escalation of the war beyond Gaza’s borders, the World Bank said there was a risk of the cost of crude entering “uncharted waters”.
  A “large disruption” scenario comparable with the Arab oil boycott of the west in 1973 would create supply shortages that would lead to the price of a barrel of oil increasing from about $90 to between $140 and 157. The previous record – unadjusted for inflation – was $147 a barrel in 2008.

Importance:
- Supply shrinking Escalation of Israel-Hamas war into Middle East-wide conflict would lead to the increasing in the oil price and the global oil supply to be shirked due to the lack of oil.
- Higher food prices Since we need oil for cooking and transporting food, higher oil prices inevitably mean higher food prices. If a severe oil-price shock materialises, it would push up food price inflation that has already been elevated in many developing countries. An escalation of the latest conflict would intensify food insecurity across the world.

Reference: theguardian.com/business/2023/oct/30/world-bank-warns-oil-price-could-soar-to-record-150-a-barrel