The World Bank has forecast energy prices to rise by about 50 percent in 2022 compared to last year. Prices are expected to remain elevated for longer than previously anticipated, it said.
The war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024, the World Bank said in its latest Commodity Markets Outlook report.
“We are expecting energy prices to go up by 50 percent in 2022 compared to last year. So, a large increase. And particularly in the case of crude oil, the price for Brent Crude Oil, the international benchmark is expected to average at $100 a barrel this year. And that would be at the highest level since 2013,” Peter Nagle, Senior economist at the World Bank, said.
“We expect prices to decline a bit in 2023 and 2024, but they are expected to remain much higher than previously anticipated. Now in the case of natural gas, we are actually expecting prices to double in 2022 compared to last year”, he added.
Brent Crude futures were up 7 cents at $117.7 a barrel on Friday.
Reuters reported that a decision on Thursday by the OPEC+ to increase output by 648,000 barrels per day (bpd) in July and August, instead of by 432,000 bpd as previously agreed, was seen as hardly enough for a tight market, Reuters reported.
According to the World Bank’s outlook, if the Russia-Ukraine war prolongs or additional sanctions are imposed on Russia, prices could be even higher and more volatile than currently projected.