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Recent changes in the situation in the Middle East have caused fluctuations in international oil prices. On Thursday local time, the latest report released by the World Bank pointed out that if the conflict in the Middle East escalates, resulting in a sharp rise in oil prices, it may undermine the process of global central banks to reduce inflation.
CNBC Jiang Yu: International oil prices fluctuated overnight, and oil prices were initially suppressed after the US GDP fell short of expectations in the first quarter. But then news that Israel might conduct an operation in the southern Gaza Strip city of Rafah once again raised market sentiment and traders feared tight crude supplies and oil prices rose.
The June WTI contract rose to $83.57 a barrel and has risen more than 16% so far this year. Brent crude due in June rose 1.12% overnight to settle at $89.01 a barrel and has risen more than 15% so far this year.
A recent Goldman Sachs report predicts that the geopolitical risk premium in oil prices will fall in the coming months, and oil prices may fall by $5 to $10 per barrel.
However, on Thursday local time, the World Bank issued a warning that the situation in the Middle East is still uncertain. A major energy price shock could undermine global progress in reducing inflation over the past two years.
According to the World Bank report, the 2% decline in global inflation between 2022 and 2023 was largely due to the collapse of nearly 40% in commodity prices. However, according to the World Bank's latest outlook report, a conflict between one or more oil-producing countries in the Middle East could reduce the supply of oil by 3 million barrels per day, which could lead to an average of $102 per barrel. Such a rise in prices could lead to a near-halt in the global process of reducing inflation.
Equally concerned are Norway's sovereign wealth fund, the world's largest sovereign wealth fund. In a recent interview with CNBC, its CEO pointed out that it is necessary to be wary of overheating commodity markets.
The S&P GSCI, a benchmark index that tracks global commodity performance, has risen more than 11% since the start of the year. Prices including oil, copper and gold have all surged so far this year.
Nikola Tangen, Chief Executive Officer, Norges Bank Investment Management Fund: The most worrying thing is what the impact this will have on inflation. If the prices of energy and raw materials continue to rise, it will be passed on to commodity prices, which will eventually lead to higher commodity prices. This is indeed an uncertaintie in terms of the direction of inflation expectations.
In addition to the situation in the Middle East, another major focus of the oil market now is whether OPEC+ will cancel its production cut plan this year. The World Bank said oil prices would fall to an average of $81 a barrel if the group restored 1 million barrels of oil per day to the market in the second half of the year.
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Editor: Wang Yifan