Middle East war to trigger biggest energy price surge in 4 years: World Bank

Energy prices are projected to surge 24% this year to their highest since Russia’s invasion of Ukraine in 2022, as the war in the Middle East shocks global commodity markets, the World Bank Group said Tuesday.

In its latest Commodity Markets Outlook report, the bank forecast overall commodity prices to rise 16% in 2026, driven by higher energy and fertilizer prices and record-high prices for several key metals.

Attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz, which handles 35% of global seaborne crude oil trade, have triggered the largest oil supply shock on record, cutting global oil supply initially by 10 million barrels per day, said the report.

The World Bank expects Brent crude to average $86 per barrel in 2026, up from $69 in 2025, assuming most acute disruptions end in May and shipping through the Strait of Hormuz gradually returns to pre-war levels by late 2026.

Fertilizer prices forecast to jump 31%

“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, the World Bank Group’s chief economist and senior vice president for Development Economics.

He said the poorest people and developing economies, already struggling under heavy debt burdens, would be hit hardest.

Fertilizer prices are projected to increase 31% in 2026, driven by a 60% jump in urea prices, while fertilizer affordability is expected to fall to its worst since 2022, threatening farmers’ incomes and future crop yields.

The report also said a prolonged conflict could push up to 45 million more people into acute food insecurity this year, citing the World Food Program.

Prices for base metals, including aluminum, copper and tin, are expected to reach all-time highs, while precious metals are forecast to rise 42% on average as geopolitical uncertainty drives demand for safe-haven assets.

Developing economies’ inflation seen at 5.1%

The World Bank said higher commodity prices will increase inflation and weaken growth worldwide.

Inflation in developing economies is projected to average 5.1% in 2026, one percentage point higher than expected before the war, while growth in developing economies is forecast at 3.6%, a downward revision of 0.4 percentage points since January.

The report warned that Brent crude could average as high as $115 per barrel in 2026 if hostilities escalate, critical oil and gas facilities suffer more damage and export volumes recover slowly.

“The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis,” said Ayhan Kose, the World Bank’s deputy chief economist and director of the Prospects Group.

He urged governments to avoid broad, untargeted fiscal support measures and focus on rapid, temporary support for the most vulnerable households.