The Israel-Hamas war has the potential to disrupt oil supply in the Middle East region, leading to a rally in prices for the energy source that can impact other commodities, worsening global food insecurity, the World Bank said in a report released this week.
On Tuesday, U.S. benchmark West Texas Intermediate crude CL.1, -1.42% CLZ23, -1.42% saw its December contract settle at $81.02 a barrel on the New York Mercantile Exchange, down from the $82.79 settlement for front-month prices on Oct. 6, the day before the Hamas attack on Israel. On its expiration day, global benchmark Brent crude for December delivery BRNZ23, -0.03% ended at $87.41 on ICE Futures Europe, less than $3 above the $84.58 Oct. 6 settlement.
Oil supplies now come from many sources, including Mexico, Alaska, U.S. shale oil, Canadian oil sands, and biofuels — instead of relying heavily on a few producers, particularly those in the Middle East, it said. As output cuts by OPEC+ are removed and global activity slows, oil prices are then expected to edge down to an average of $81 in 2024, it said.
“Supply disruptions affect other commodities mainly through higher energy prices, which raise production costs of food and metals,” it said. “By increasing global uncertainty, the conflict could also raise the price of gold GC00, -0.54%, often considered a safe haven asset.”
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