The ongoing conflict in the Middle East is set to trigger the sharpest increase in global energy prices since 2022, sending shockwaves through commodity markets and clouding growth prospects worldwide, according to the latest Commodity Markets Outlook from the World Bank Group.
Energy prices are projected to surge by 24% in 2026, lifting overall commodity prices by 16%. The increase is being driven by disruptions to oil supplies, rising fertiliser costs, and record highs across several key metals.
At the centre of the crisis are attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz—a critical chokepoint that handles around 35% of global seaborne crude oil trade. The World Bank describes the situation as the largest oil supply shock on record, with global supply reduced by an estimated 10 million barrels per day.
Although prices have eased slightly from recent peaks, Brent crude remained more than 50% higher in mid-April compared to the start of the year. The benchmark is now forecast to average $86 per barrel in 2026, up from $69 in 2025, assuming disruptions begin to ease by May and shipping routes gradually normalise by late 2026.
“The war is hitting the global economy in cumulative waves—first through energy, then food, and ultimately inflation,” said Indermit Gill, Chief Economist of the World Bank. He warned that rising prices will disproportionately impact poorer populations, particularly in developing economies already burdened by high debt, adding: “War is development in reverse.”
Fertiliser markets are also under mounting pressure, with prices expected to rise by 31% this year, driven by a 60% spike in urea. This is likely to push affordability to its lowest level since 2022, squeezing farmers’ margins and heightening concerns over future crop yields. The World Food Programme has warned that prolonged disruption could push up to 45 million more people into acute food insecurity.
Meanwhile, demand from data centres, electric vehicles, and renewable energy is driving base metal prices—including aluminium, copper, and tin—to record levels. Precious metals are also climbing sharply, with prices projected to increase by 42% amid heightened geopolitical uncertainty and stronger demand for safe-haven assets.
The inflationary impact is expected to be significant. Inflation in developing economies is now projected to average 5.1% in 2026—one percentage point higher than pre-conflict estimates. Economic growth is also set to weaken, with developing countries forecast to expand by 3.6%, marking a downward revision of 0.4 percentage points.
Countries directly affected by the conflict are expected to bear the brunt of the slowdown. More broadly, around 70% of commodity-importing economies and over 60% of exporters could experience weaker-than-expected growth.
The outlook could deteriorate further if the conflict escalates. In a more severe scenario, Brent crude could average as high as $115 per barrel in 2026 if damage to key oil and gas infrastructure intensifies and export recovery slows. This would place additional upward pressure on fertiliser and alternative energy costs, potentially pushing inflation in developing economies to 5.8%, levels not seen since 2022.
“The series of shocks over the past decade has significantly reduced governments’ ability to respond,” said Ayhan Kose, urging policymakers to avoid broad, untargeted subsidies and instead prioritise temporary, targeted support for vulnerable groups.
The report also highlights how geopolitical tensions amplify market volatility. Oil price swings during such periods are roughly twice as severe, with even a 1% drop in supply capable of pushing prices up by an average of 11.5%. These shocks often spill over into natural gas and fertiliser markets, with delayed but lasting effects on food security and poverty.
As global markets absorb yet another major disruption, the World Bank’s message is clear: without stability, the path to recovery and sustainable development will remain increasingly uncertain.
