Crude oil prices could go as high as $140 per barrel and send the world into a recession, Paris-based Allianz Trade said on Friday.
Tensions in the Middle East and escalations between Israel and Hamas into a broader regional conflic could trigger a price surge for crude oil that could send the commodity to trade at $140 per barrel, Ana Boata, head of economic research at Allianz Trade told Bloomberg Television on Friday.
“Higher oil prices, that’s the direct impact,” Boata said, adding that prices could escalate from the current $90 mark to $140 at its peak, even averaging $120 in 2024.
“Clearly at these levels of energy prices, we understand that central banks would be much more into the wait-and-see mode before they cut interest rates,” Boata said, adding that that could send the world into a recession, slowing down global growth to just 2%–the contraction threshold—which is a half a point less than the baseline scenario.
“Clearly we don’t have this as a baseline scenario for now,” Boata said, “but clearly we can give a probability of 20% to this downside scenario.” And according to Boata, that would lead to high oil prices. “That’s the direct impact of this conflict.” This could send global inflation rates to as high as 5.
Even before the conflict, oil industry analysts were raising crude oil price forecasts for 2023—but only a handful of those polled by Reuters in September saw crude oil rising to $100. At the time, Brent was trading at $96. The Reuters September Oil Poll showed on Friday that 42 economists and analysts now see Brent Crude prices averaging $84.09 per barrel in 2023, up from the $82.45 consensus projection in August.