In the report “Commodity Market Outlook” published on October 30, the World Bank (WB) warned that if the conflict spreads outside the Gaza Strip, it would lead to repeated oil embargoes by other countries. Saudi Arabia in 1973, oil prices may rise to 157 USD/barrel.
according to station cnbcWB said that with such a “major disruption” scenario, global oil supply would be reduced by 6-8 million b/d, which would push oil prices up by 56%-75%, to USD 140-157/day. Is equal to bin.
Oil prices quadrupled in the wake of the oil crisis 50 years ago, when Arab energy ministers imposed an oil export embargo on the US in retaliation for its support of Israel in the war. Arab–Israeli conflict of 1973.
According to WB forecasts, in case of “minor disruption”, global oil supply will decline by 500,000 b/d to 2 million b/d, which will lead to oil prices around USD 93-102/barrel. The “moderate disruption” scenario is a reduction of 3-5 million b/d, leaving oil prices at 109-121 USD/barrel.
Saudi Aramco Petroleum Group production facility in Saudi Arabia Photo: Reuters
Mr Indermit Gil, WB chief economist, said the latest conflict in the Middle East followed the Russia-Ukraine conflict, which is considered the biggest shock to commodity markets since the 1970s. Although neither Israel nor the Palestinian Territories play a major role in oil, the conflict occurs in an important oil-producing region.
Newspaper Guardian Mr Gill stressed that if the conflict escalates, the global economy would face a double energy shock for the first time in decades – not just from the conflict in Ukraine but also from the Middle East.
Warning of the risk of a domino effect, Mr Ayhan Köse, Deputy Chief Economist of the World Bank, said higher oil prices mean food price inflation, exacerbating food insecurity not only in the region but around the world.
Nevertheless, according to reutersDespite the potential impact of the Israel-Hamas conflict, most Gulf stock markets ended the session with gains on October 30 as they awaited the outcome of the US Federal Reserve (FED) meeting. Monetary policy in the six Gulf Cooperation Council (GCC) countries often follows the Fed’s moves on interest rates as all regional currencies are pegged to the USD.
The FED is expected to announce its interest rate decision on November 1 (local time). According to forecasts from CME’s FedWatch interest rate tracking tool, there is more than a 96% chance that the Fed will keep interest rates unchanged at 5.25%-5.50%.
In addition to concerns about oil prices, China’s manufacturing activity unexpectedly contracted in October. Data from China’s National Bureau of Statistics on October 31 showed that the purchasing managers’ index (PMI) in the country fell to 49.5 in October from 50.2 in September. PMI above 50 indicates expansion of manufacturing activity and below 50 indicates contraction.
The non-manufacturing PMI index also declined to 50.6 in October from 51.7 in September, indicating a slowdown in activity in the services and construction sectors.
Mr. Zhang Zhiwei, Chairman of Pinpoint Asset Management Company (Hong Kong – China), argued: “The unexpected decline in the manufacturing PMI shows that the recovery in China faces a difficult path, as domestic demand is still quite weak. Meanwhile, policies The real estate sector needs to adjust to avoid causing further damage to the economy.”