World Bank warns energy prices to surge amid Middle East conflict

Energy prices are projected to rise by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022, as the conflict in the Middle East continues to disrupt global commodity markets, according to the World Bank Group’s latest Commodity Markets Outlook.

Overall commodity prices are expected to increase by 16% in 2026, driven by higher energy and fertiliser costs as well as record levels in several key metals.

The report warns that the shock will have significant consequences for employment and development worldwide.

Attacks on energy infrastructure and disruption to shipping in the Strait of Hormuz, which handles around 35% of global seaborne crude oil trade, have triggered what the World Bank describes as the largest oil supply shock on record, cutting global supply by about 10 million barrels per day at its peak. Brent crude prices remain more than 50% higher than at the start of the year, even after recent easing.

Brent oil is forecast to average $86 per barrel in 2026, up from $69 in 2025, with assumptions that severe disruptions ease in May and shipping gradually returns to normal by late 2026.

“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. “The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest, as will developing economies already struggling under heavy debt burdens. All of this is a reminder of a stark truth: war is development in reverse.”

Fertiliser prices are expected to rise by 31% in 2026, including a 60% increase in urea, pushing affordability to its worst level since 2022. The World Food Programme warns that prolonged conflict could push up to 45 million additional people into acute food insecurity.

Prices for base metals such as aluminium, copper, and tin are also forecast to reach record highs, supported by demand from sectors including electric vehicles, data centres, and renewable energy. Precious metals are expected to rise by 42% in 2026 amid heightened geopolitical uncertainty and demand for safe-haven assets.

The World Bank says higher commodity prices will fuel inflation and slow global growth. Inflation in developing economies is projected to average 5.1% in 2026, one percentage point above pre-war forecasts, while growth is expected to slow to 3.6%, a downward revision of 0.4 percentage points.

The report also warns that further escalation could push Brent crude as high as $115 per barrel in 2026 if energy infrastructure is further damaged and supply recovery is delayed, worsening inflation and deepening food and energy pressures worldwide.

By Sabina Mammadli