The World Bank Group has forecasted a higher global inflation rate as it said the current oil price rise may continue into 2022, averaging over 80 percent higher this year than what it was in 2021.
According to its latest Commodity Markets Outlook released on Thursday, the global lender said higher oil prices are also impacting food security in some countries already.
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This is just as Brent Crude prices hit $86.10 per barrel early on Thursday, jumping to the highest level in three years, before retreating to just above $85 amid profit-taking.
Experts said the reluctance of OPEC+ to pump more in the short term suggests that oil prices will remain well supported for the remainder of this year.
Although Nigeria has set a $57 per barrel benchmark for the 2022 budget, it is expected to produce 1.88 million barrels per day while targeting N3.16 trillion from oil proceeds.
The World Bank outlook noted that energy prices soared in the third quarter of 2021 and are expected to remain elevated in 2022, adding to global inflationary pressures and potentially shifting economic growth to energy-exporting countries from energy-importing ones.
“Energy prices, expected to average more than 80% higher in 2021 compared to last year, will remain at high levels in 2022 but will start to decline in the second half of the year as supply constraints ease.”
The global bank however feared that non-energy prices, including agriculture and metals, are projected to decrease in 2022, following strong gains this year.
Chief Economist and Director of the World Bank’s Prospects Group, Ayhan Kose, said, “The surge in energy prices poses significant near-term risks to global inflation and, if sustained, could also weigh on growth in energy-importing countries.”
Specifically, the outlook held that crude oil prices (an average of Brent, WTI, and Dubai) are expected to average $70 in 2021, an increase of 70%. They are projected to be $74 a barrel in 2022 as oil demand strengthens and reaches pre-pandemic levels.