The war in the Middle East could cause the price of oil to rise to US$140 a barrel and take to the world on the verge of a recessionaccording to Ana Boatahead of economic research at Allianz Trade.
In an interview with Kriti Gupta on Bloomberg Televisionthe Paris-based analyst estimated that there is a 20% probability that this result will occurat a time when hostilities between Israel and Hamas —which the United States and the European Union classify as a terrorist group— They are transforming into a broader regional conflict that affects crude oil supplies.
“Higher oil prices are the direct impact”, he said Friday, detailing how such a scenario would play out. “There is a possibility that oil prices rise from US$90 per barrel to US$140 at its peakand even to US$120 on average next year.”
These projections would have a tremendous human cost and would be a nightmare for those responsible for monetary policy to face the consequences. Officials of the International Monetary Fund who participated in meetings last week They also focused on the possible impact of oil and, last week, the president of the European Central Bank, Christine Lagarde, highlighted the risk at a briefing with finance ministers.
“Without a doubt, at these energy price levels, We understand that central banks would be much more on hold before cutting interest rates”said Boata, referring to an outcome of faster inflation and even weaker economic growth. “That could lead us to the recession scenario which some would have expected anyway in the base case.”
The World Bank warned that the price of crude oil could exceed US$100
Global growth as a whole would slow down to 2%, near the threshold that indicates contraction, Boata said. Meanwhile, The threat of consequences on financial markets should not be ruled out.
“Sovereign risks have increased, and that is a reality, because real interest rates are clearly much higher than growth”Boata observed.
“One of the concerns of economists—and we all remember it very well— It is the new version of the 2012 sovereign crisis in Europeand not only in Europe, because even US is highly exposed to rising interest payments“, he pointed. “In reality, no government has clear plans to adjust its public finances.”
