The World Bank predicted on Wednesday that after this year’s 60% increase in response to Russia’s invasion of Ukraine, energy prices will fall 11% in 2023. However, slower global development and Covid limits in China could cause a deeper fall. In its most recent Commodity Markets Outlook, the bank predicted that the price of Brent crude will average $92 per barrel in 2023 before declining to $80 in 2024, still much higher than the five-year average of $60.
The European Union’s embargo on Russian oil and gas products, along with limitations on insurance and shipping, is set to go into effect on December 5. According to the report, this may cause Russia’s oil exports to decline by as much as 2 million barrels per day. The proposed oil price cap from the Group of Seven may also influence the flow of oil from Russia, although it was stated that the mechanism was “untested” and would require the involvement of significant emerging markets and developing nations in order to be successful.
According to Ayhan Kose, the head of the World Bank Group that creates the report, “the combination of heightened commodity prices and sustained currency depreciations translates into higher inflation in many countries.” He warned that underdeveloped nations and emerging markets should be prepared for “a period of even greater volatility in global financial and commodity markets.”
