Middle East crisis raises geopolitical risks, says World Bank

The latest crisis in the Middle East has raised geopolitical risks for commodity markets, but so far its impact on prices has been small, says a World Bank report released on Monday. It said that previous military conflicts in the region often resulted in higher prices and vitality in commodity markets. According to the ‘Commo­dity Markets Outlook’ report this suggests that an escalation could trigger sharp oil supply disruptions, depending on the duration and scale of the escalation. The baseline forecasts assume that the latest conflict will have a limited impact on commodity prices, with prices ultimately being driven by fundamental demand and supply factors, says the report. The report said that geopolitical risks have sharply increased in the wake of the latest conflict in the Middle East and constitute the most important upside risk to commodity prices. If the conflict intensifies and becomes a wider regional conflict, the impact on commodity markets could be significant.