Calm on crude prices, the World Bank does not rule out a possible outbreak

(Boursier.com) — Crude prices are losing some ground at the start of the week after their sharp rise on Friday. The barrel of American light crude oil (WTI) for December delivery fell 2% to $83.9 on the Nymex while the barrel of Brent from the North Sea with the same maturity lost 1.7% to $89 in London. While the war between Israel and Hamas has had minimal impact on the oil market so far, the World Bank warns that even a slight disruption in crude supplies due to the escalating conflict in the Middle East could take away between 500,000 and 2 million barrels per day from world markets and, as a result, raise prices to between 93 and 102 dollars per barrel.

In the event of a sharp deterioration in the conflict, the institution’s extreme scenario, between 6 and 8 million barrels of oil per day could be taken off the market, a scale comparable to the Arab oil embargo of 1973, and prices could then reach up to 157 dollars per barrel. At present, the World Bank believes that the relative calm of the market “may reflect the improved capacity of the global economy to absorb oil shocks.”

According to the WB’s baseline forecast, crude prices are expected to average $90 per barrel in the current quarter, before falling to an average of $81 per barrel next year, amid a slowdown in global economic growth.