World Bank warns of 'dual shock' in commodities due to Middle East conflict

By Tuba Ongun

ANKARA (AA) – Global commodity markets could face "dual shock" when the latest conflict in the Middle East, on top of disruptions caused by the Russian war on Ukraine, escalates, the World Bank warned on Monday.

This could push global commodity markets into "uncharted waters," the bank said in its latest Commodity Markets Outlook report.

The bank expected the oil prices to average at $90 per barrel in the last quarter of this year before falling to $81 a barrel next year as global economic growth slows.

Overall commodity prices were projected to fall 4.1% next year to stabilize in 2025, the report noted.

The Palestine-Israel conflict has had a limited impact on global commodity markets so far, the bank said, adding that overall oil prices have risen around 6% since the onset of the fighting on Oct.7.

The outlook for commodity prices would darken quickly if the conflict escalated, according to the report.

Indermit Gill, the World Bank's chief economist and senior vice president for Development Economics, called on policymakers to be vigilant about the disruptive effects of the turmoil.

"If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades – not just from the war in Ukraine but also from the Middle East," Gill said.

Ayhan Kose, the World Bank's deputy chief economist and director of the Prospects Group, warned that higher oil price would push food prices up.

"At the end of 2022, more than 700 million people – nearly a tenth of the global population – were undernourished. An escalation of the latest conflict would intensify food insecurity, not only within the region but also across the world," Kose added.