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Will Rising Oil Prices Affect Supply Chains?


Supply chains are already under pressure. And now we have an additional challenge to face. The World Bank has recently issued a warning about surging oil prices, which will only add to the existing instability in the Middle East and pose a significant risk to supply chains.




According to the international financial institution, the ongoing tensions between Iran and Israel could lead to a serious escalation and push oil prices beyond $100 a barrel.


Ongoing tensions between Iran and Israel could push oil prices beyond $100 a barrel.

 

This only adds to the current pressures. Philip Damas, Drewry MD and head of supply chain advisors, believes Iran’s recent seizure of a box ship has widened the area of risk. On 13 April, the Iranian military seized the 15,000 teu box ship, MSC Aries, and threatened to close the Strait.

  

“From the Suez Canal Red Sea area to the entire Gulf of Hormuz region is the gateway for a region responsible for 3% of worldwide container traffic, a total market of 17m teu. Free navigation through the Strait of Hormuz to and from the Gulf ports is vital for the oil and gas sector and for the global economy.”

 

Now, the latest World Bank warning on oil prices is causing concern in the industry. The commodity markets report details: “More severe disruption could see oil prices surpass $100 a barrel, raising global inflation in 2024 by nearly one percentage point.”

 

It seems we have more trouble ahead.

 

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