‘If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades,’ said the World Bank’s chief economist escalates across the Middle East it could spark a second energy crisis which could send food and fuel prices spiralling, the World Bank is warning.
“Policymakers will need to be vigilant. 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.” A “large disruption” scenario would be comparable to the effect of the 1973 Yom Kippur War, which saw Syria and Egypt launch a surprise attack on Israel. It resulted in global oil supplies falling by 6 million to 8 million barrels a day, resulting in price increases of 56-75 per cent, with oil fetching between $140 and $157 a barrel.
If the war remains confined to Israel and Gaza, World Bank economists forecast the impact will be limited, with oil prices expected to average $90 a barrel in the current quarter before declining to an average of $81 a barrel next year as global economic growth slows. It argues that diesel, which currently averages 162p across the UK, is overpriced by around 4p a litre. Last week a litre of wholesale diesel averaged 123p, meaning average retailer margin is around 12p, compared to the 8p long-term figure tracked by the RAC since 2012.