The World Bank has warned that the Middle East crisis might drive up global commodity and crude oil prices. While the impact has been modest thus far, the World Bank has warned that the energy market turbulence may have an impact on food security as well.

According to the World Bank's newest Commodity Markets Outlook, oil prices are predicted to average $90 per barrel in the current quarter before falling to an average of $81 per barrel next year as global economic development slows. 

Overall commodity prices are expected to fall 4.1% next year, according to the report. As supply increases, agricultural commodity prices are projected to fall next year. Base metal prices are also expected to fall 5% in 2024. Commodity prices are predicted to level out by 2025.

Having said, it observed that the conflict's effects on global commodity markets have been limited thus far, adding that total oil prices have climbed approximately 6% since the conflict began, while prices of agricultural commodities, most metals, and other commodities have stayed mostly steady.

However, if the war escalates, the outlook for commodities prices will "darken" swiftly. According to the Bank, in the event of a minor disruption, global oil supply would be reduced by 500,000 to 2 million barrels per day, and prices would initially rise by 3% to 13% relative to the current quarter's average - to a range of $93 to $102 per barrel.

In a "medium disruption" situation. The global oil supply would be reduced by 3 million to 5 million barrels per day, causing oil prices to rise by 21% to 35% initially, to between $109 and $121 per barrel.

In a "large disruption" scenario, global oil supply would be reduced by 6 million to 8 million barrels per day, causing prices to rise by 56% to 75% initially, to between $140 and $157 per barrel.

According to Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, the latest violence in the Middle East follows the biggest shock to commodities markets since the 1970s: Russia's war with Ukraine. "That had a ripple effect on the global economy that continues to this day." "Policymakers must remain vigilant," he warned.

"Higher oil prices, if sustained, inevitably mean higher food prices," said Ayhan Kose, Deputy Chief Economist and Director of the Prospects Group at the World Bank. "If a severe oil-price shock occurs, it will exacerbate food price inflation, which is already high in many developing countries."