WorldBank – Commodity Markets Outlook, Oct 2023

The recent conflict in the Middle East has added uncertainty to commodity markets already dealing with various shocks. Before the conflict, voluntary oil supply withdrawals by OPEC+ countries caused energy prices to increase by 9% in the third quarter. As a result, the World Bank's commodity price index rose by 5% during that period and is now 45% higher than the average from 2015-2019. Currently, the conflict has had a limited impact on commodity prices, with only moderate increases in oil and gold prices while most other prices have remained stable. However, if the conflict escalates, there is a significant risk of surging oil and commodity prices, which would worsen food insecurity in the region and globally. The report includes a Special Focus section that assesses the potential impact of the conflict on commodity prices. It suggests that if the conflict remains contained, commodity prices will slightly decrease in the next two years. However, if the conflict escalates, the report outlines three risk scenarios based on historical precedents to estimate the effects of disruptions to global oil supply. The scale and duration of the disruptions will determine the extent of the impact. Additionally, trade restrictions and weather-related disruptions could also lead to higher prices, while weaker-than-expected global economic growth presents a downside risk to commodity prices.