The World Bank Group’s latest Commodity Markets Outlook warns of a significant surge in global energy prices, primarily driven by the escalating conflict in the Middle East. Projections indicate that energy prices could jump by 24% by 2026, reaching levels not seen since the 2022 Russia–Ukraine war. This increase is part of a broader trend, with overall commodity prices expected to climb by 16% due to the rising costs of energy, fertilizers, and key metals.
The report highlights critical disruptions to global oil supply, including targeted attacks on energy infrastructure and vital shipping routes, particularly in the Strait of Hormuz, which accounts for approximately 35% of the world’s seaborne crude oil trade. These disruptions have created a substantial supply shock, temporarily reducing global oil availability and pushing Brent crude prices significantly higher, with forecasts averaging $86 per barrel in 2026.
The ripple effects of these rising energy costs are anticipated to be far-reaching, leading to higher inflation, subdued economic growth, and increased financial strain on developing economies. The World Bank report cautions that inflation in these countries might surpass previous expectations, while economic growth is likely to decelerate as elevated prices diminish household incomes and negatively impact export performance in affected regions.
Furthermore, fertilizer and food markets are bracing for intense pressure. Fertilizer prices are projected to rise sharply, making affordability the worst it has been since 2022. This trend could severely impede agricultural output and exacerbate food insecurity, potentially pushing millions into acute hunger if the conflict persists.
Beyond energy and food, metals and safe-haven assets are also experiencing notable price increases. Base metals such as copper and aluminum have reached record highs, fueled by strong industrial demand, while precious metals are appreciating amidst heightened geopolitical uncertainty. These movements underscore widespread disruptions across global commodity markets.
The report emphasizes that geopolitical shocks not only amplify market volatility but also generate long-lasting spillover effects across energy, food, and fertilizer sectors. Experts advise governments to prioritize targeted support for vulnerable populations over broad subsidies, warning that continued instability could further aggravate inflation, debt burdens, and hinder development outcomes in low- and middle-income countries.
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