For the World Bank, a prolonged war in the Middle East could reignite inflation

If the conflict between Israel and Hamas were to extend, energy prices could accelerate sharply, mainly due to oil supply disruptions.

The conflict in Gaza, if it were to spread to the rest of the region, could have a significant impact on the global economy by fueling inflation, driven by a rise in energy prices, according to a new report released Thursday by the World Bank ( WB) has been published. .

According to data from the commodity market report, as tensions between Israel and Iran remain high, a wider conflict in the Middle East could lead to oil supply disruptions and a sharp acceleration in the Brent (European benchmark for black gold), which could exceed 100. dollars per barrel.

A barrel price higher than the 2015/2019 period

If geopolitical tensions are limited to the Gaza conflict, prices per barrel should reach an average of $84 this year, before falling to an average of $79 in 2025. However, this remains higher than the pre-pandemic long-term average: between In 2015 and 2019, the average price of a barrel of Brent was about $57.

But even without the conflict in the Middle East, these higher prices apply to all commodities, weighing on inflation and partly explaining why the slowdown in growth has stalled since the beginning of the year. Between June 2022 and June 2023, global commodity prices fell by 40% but have remained stable since then. The World Bank expects an average decline of 3% in 2024 and 4% in 2025.

Bottom price”

“Inflation has not yet been overcome. An essential element for its decline is that commodity prices have reached a bottom. This would mean that interest rates could remain higher this year and next than initially expected,” the World Bank’s chief economist pointed out. , Indermit Gill, quoted in a press release. The apparent slowdown in inflation in 2023 seemed to raise hopes for a quick rate cut, especially from the European Central Bank (ECB) and the US Federal Reserve (Fed).

But since early 2024, inflation in the United States has stabilized and the first rate cut, initially expected in June, will not come before September or in the last quarter at best. However, maintaining high interest rates for a long period is not without consequences for the global economy, including the risk that already weakened countries will enter a debt crisis that could exacerbate the economic decline of certain countries in the South.