Oil prices could average $102 per barrel if a major conflict in the Middle East breaks out involving one or more oil producers, according to the World Bank.
"A key force for disinflation — falling commodity prices — has essentially hit a wall," the World Bank's chief economist said. Tensions in the Middle East reached a boiling point earlier this month as OPEC member Iran and Israel appeared on the brink of war, raising fears that crude oil supplies could be disrupted as a consequence.
Oil prices could average $102 per barrel if a conflict involving one or more oil producers in the Middle East results in a supply disruption of 3 million barrels per day, according to the World Bank's latest commodity markets outlook report. An oil price shock of this magnitude could stall the fight against inflation almost entirely, according to the report.