Bank of England warns of potential disruption in oil supplies due to Middle East conflict

(MENAFN) The Bank of England is closely monitoring the escalating crisis in the Middle East, as fears grow that an intensifying conflict between Iran and Israel could significantly disrupt global oil supplies, potentially leading to an energy crisis reminiscent of the 1970s. In an interview with the Guardian, Andrew Bailey, the Bank's governor, emphasized the central bank's vigilance while acknowledging the limitations in its ability to stabilize oil prices if the situation worsens.

Bailey pointed out the fragility of the global economy in light of geopolitical unrest, which has already caused oil prices to rise by 3 percent following Israel's invasion of southern Lebanon and Iran's subsequent ballistic missile retaliation. He expressed concerns over the possibility of the conflict escalating and disrupting crude oil supplies from a region that is crucial for global energy.

Despite the current tensions, Bailey noted that there hasn't been a dramatic spike in oil prices since the Hamas attack on Israel, which has provided some relief for monetary policymakers. He referred to the historical context of the 1970s, when rising oil prices caused significant economic disruption, and recognized the importance of avoiding similar scenarios today.

While he remains cautious about the volatile situation, Bailey mentioned that his discussions with regional counterparts indicate a strong commitment to maintaining market stability for the time being. However, he acknowledged that there are limits to this control if circumstances deteriorate significantly. He also remarked on the resilience of the UK economy, stating that it has weathered recent global shocks better than many had anticipated, providing a foundation for future growth.

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