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Gaza war could double oil prices, threaten global food security

Washington-based multilateral lender World Bank compared the situation to the 1973 Arab oil embargo in its latest Commodities Market Outlook.

The conflict in the Middle East could cause the price of oil to sail past $150 per barrel — nearly double today’s price — and if sustained would threaten global food security, the World Bank warned on Monday, amid fears that the Israel-Hamas war may expand to other countries in the crude-rich region.

In its latest Commodities Market Outlook, the Washington-based multilateral lender said “a large disruption” it compared to the 1973 Arab oil boycott would create supply shortages that would cause the price of oil to rise to between $140 and $157 a barrel, possibly marking a new record. The previous record — unadjusted for inflation — was $147 a barrel in 2008 during the global financial crisis. The World Bank warned that even a “small disruption” could see prices back at $100 a barrel. Brent crude hovered around $88 on Monday as the conflict that has seen thousands of Israelis and Palestinians killed and many more wounded and abducted drew into its fourth week.

Craig Erlam, senior market analyst at Oanda, believes that oil reaching $150 due to this conflict is unlikely but not impossible.

"The fear in the region is the potential to escalate to include those major oil producers and disrupt flows and so the upside risks to the price are severe," he told Al-Monitor. "As yet, we aren’t seeing this, which is why the price of Brent is now not far from the level it traded at prior to the Hamas attack."

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