Oil prices could rise above $150 a barrel if the Israel-Gaza war escalates into a wider Middle East conflict, the World Bank has warned.

Global benchmark, Brent crude, soared from below $85 before Hamas’s 7 October attack on Israel to $93 within 10 days, amid fears that escalation could result in supply disruption, though they have drifted back to $86.

The World Bank says there remains a risk that the conflict could “push global commodity markets into uncharted waters” and warns of a similar scenario that saw the price surge in 1973. The previous record of $147 a barrel was set in July 2008 when Brent leapt amid tensions between the West and Iran.

The loss of between 500,000 to two million barrels a day would lead to oil prices rising to between $93 and $102 a barrel, said the World Bank.

It said Its base case is that economic slowdown will see Brent crude fall to an average of $81 a barrel next year.

Indermit Gill, the World Bank’s chief economist, said: “The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s — Russia’s war with Ukraine.

“Policymakers will need to be vigilant. If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades.”

BP profits fall

Energy giant BP has reported profits of $3.3bn (£2.7bn) between July and September, down from $8.1bn in the same period last year, which benefitted from a massive $8bn-plus favourable accounting adjustment.

The figure for the third quarter is up from $2.6bn in the previous three months.

Wholesale oil prices are lower than during the early months of the Ukraine war but have risen recently.

BP, which also announced a new $1.5bn share buyback, declared a dividend of 7.27 cents per share, the same as the second quarter but higher than the 6.006 cents reported last year.

“This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery,” said chief executive Murray Auchinclos who replaced Bernard Looney who resigned as the company’s chief executive in September following a review of his personal relationships with colleagues.

Stuart Lamont, investment manager at RBC Brewin Dolphin, said: “BP’s numbers have improved on the second quarter, but they have still missed market expectations.

“After a tumultuous year or so, with a ‘reset’ to its strategy and the departure of the previous CEO, the company is focussing on major upstream oil, gas, and LNG assets and slowing investment in renewables.

“Profits and free cashflow remain relatively strong and will underpin planned returns to shareholders, with a higher dividend than last year and a further share buyback. This may well raise eyebrows in the current environment, particularly with oil prices predicted to continue their recent rise amid geopolitical tension.“