Mideast strife could trigger energy shock, inflation rise: World Bank [Video]

The outbreak of a major conflict in the Middle East could trigger an energy shock that pushes oil prices above $100 a barrel, fuels inflation and results in higher interest rates for longer, the World Bank warned Thursday.

Tensions in the Middle East reached a boiling point earlier this month as Israel and OPEC member Iran appeared on the brink of war, raising fears that crude oil supplies could be disrupted as a consequence.

The governments in Jerusalem and Tehran appear to have decided against escalation after exchanging direct strikes on each other’s territory for the first time. Oil prices have pulled back nearly 4% from recent highs as investors have discounted the probability of a wider war in the region.

The World Bank, however, cautioned that the situation remains uncertain.

“The world is at a vulnerable moment: A major energy shock could undermine much of the progress in reducing …