The World Bank recently warned of the negative impact a potential rise in oil prices might have on the global economy.
In a report published in October 2023, the bank analyzed two possible scenarios for the escalation of the conflict in Middle East and their potential effects on oil prices and economic activity.
The current forecast is for an average oil price of $84/barrel this year, but Brent crude is already close to $88 due to the situation in the Middle East.
The Bank estimates that a moderate oil supply disruption this year would see Brent climb to $92, while a more severe disruption would push it comfortably above $100.
In such a case, international inflation would increase by 1%, causing a significant problem, especially in oil-consuming countries such as Greece.
Correspondingly, according to newsit, such a scenario would also increase the prices of other commodities, such as natural gas, fertilizers and food.
For its part, Bloomberg estimates that geopolitical threats have added $25 to the price of crude oil in recent years. Other sources place the said premium closer to $5-10, but it is clear that the concern has affected the market.
As today the price of natural gas and electricity has fallen significantly in Europe, everyone’s attention has turned to oil. In this case the E.E. and member states have limited ability to influence the price, as it largely depends on the decisions made by producers such as OPEC+.
The E.U. it is trying to become independent by investing in electrification and replacing heating systems, but this is a slow process that makes it dependent on the fluctuations of black gold for the foreseeable future.
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