After a 60% surge this year, prompted by the war
started by the Russian Federation in neighbouring Ukraine, energy prices are
forecast to drop 11% next year. According to a World Bank report, a slower
global economic growth and the Covid-related restrictions introduced in China
may lead to an even more substantial decrease.
In spite of this slow-down, energy prices will still
be 75% above the past five years’ average. The WB’s latest Commodity Markets
Outlook, made public on Wednesday, indicates that the average price of Brent
crude oil is likely to be 92 US dollars per barrel in 2023, and expected to
drop to 80 US dollars per barrel in 2024, but it will be nevertheless
substantially above the USD 60 multiannual average.
World Bank forecasts also indicate that Russia’s oil
exports might decrease to 2 million barrels a day, as a result of the ban
considered by the EU with respect to Russia’s oil and natural gas, adding to
which will be restrictions related to the insurance and shipping of Russian oil
and gas. The ban is scheduled to take effect next month.
Moreover, the report reads, G7 is looking at a yet
untested price-capping mechanism, which may also affect Russia’s oil exports.
The WB analysis also takes into account the effects of
the US dollar appreciating against the currencies of most developing economies,
a situation that has led to rising foodstuff and fuel prices. And this, the
financial institution warns, may deepen food insecurity which is already
impacting 200 million people around the world. As the authors of the document
explain, the mix of high prices for raw materials and the persistent currency
depreciation translates into higher inflation in many countries.
In this context, emerging and developing economies
should prepare for higher volatility in the global financial and commodity
markets. WB experts say that currency depreciation forced nearly 60% of the
emerging and developing economies to face increases in oil prices in their
local currencies, following the Russian invasion in Ukraine.
The WB forecast also indicates that both natural gas
and coal prices are expected to decrease in 2023 from the record-high levels
reported this year, but natural gas prices in Europe may remain almost 4 times
higher than the average for the past 5 years. (AMP)