According to an article published by the “Policy Center for the New South”.
The author of the article, Ottaviano Canuto, senior researcher at the Center, pointed out that the war in Ukraine has caused several severe shocks to the global economy, including the downward trend in global trade and financial inclusion, further disruptions in supply chains and rising commodity prices, which led to downward revisions to the outlook Economic growth accompanied by high inflation.
The same source explained that the commodity price shock, which has intensified since the middle of 2020, has led to the recording of much higher price levels in 2022, according to the “Commodity Market Prospects” report published by World Bank, released April 26. who estimated that prices will remain high in the medium term.
As for the outlook for commodity markets, it will depend on the duration of the war in Ukraine, the sanctions imposed on Russia and the severity of the disruptions in commodity flows, given that Russia and Ukraine are main suppliers of energy, fertilizers, cereals and minerals. The author of the article pointed out that Russia is the world’s leading exporter of natural gas, nickel and wheat, while Ukraine is the leading exporter of sunflower oil, adding that “it’s not a coincidence that these products have experienced particularly notable increases since the start of the conflict in Ukraine.
Several countries, including the United States, Canada and the United Kingdom, have announced bans or a phase-out of imports of Russian oil, while private buyers have also pledged to reduce their purchases of Russian oil.
Regarding the outlook for the global economy, the article by the Policy Center for the New South stopped at the report of the International Monetary Fund published on April 19, which indicates that the expected drop in demand for fossil fuels is mainly due to the energy transition that has led to a reduction in global investments in oil and gas have increased by around 20% in the last three or four months.
It should be noted that global investment in the oil and gas sector peaked at 0.9% of global GDP in 2014, declined to less than 0.5% of global GDP in 2019, and then declined further during the pandemic period.
For its part, the price of Brent averaged $116 a barrel last March, which has not been recorded since 2013.
In this regard, the World Bank predicts that oil prices will average $100 per barrel this year, before gently falling to $92 in 2023.
He pointed out that last March, natural gas prices in Europe were almost seven times higher than a year ago, while coal prices in several parts of the world also tripled due to expected disruptions in exports. of natural gas and coal.
Post-pandemic demand recovery and tight supply conditions have had a bullish effect, but further rebounds have made energy price increases over the past two years the largest in the past half-century , since the oil shock of 1973.
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