The World Bank Group has projected that global commodity prices will increase by 16 percent in 2026, driven by a sharp rise in energy and fertilizer costs, as escalating conflict in the Middle East disrupts markets. In its latest Commodity Markets Outlook, the Bank stated that energy prices are expected to surge by 24 percent this year, reaching their highest level since Russia's invasion of Ukraine in 2022.
Energy and Oil Market Disruptions
The report highlights that attacks on energy infrastructure and persistent shipping disruptions in the Strait of Hormuz, a critical waterway handling about 35 percent of global seaborne crude oil trade, have triggered the largest oil supply shock on record. At the peak of the crisis, global oil supply was cut by approximately 10 million barrels per day. Although prices have moderated from recent highs, Brent crude traded more than 50 percent higher in mid-April compared to the start of the year. It is projected to average $86 per barrel in 2026, up from $69 in 2025, assuming disruptions ease from May and maritime flows gradually normalize by late 2026.
Impact on Fertilizer and Food Security
The Bank warned that fertilizer prices are expected to rise by 31 percent in 2026, driven largely by a 60 percent spike in urea prices. This would push fertilizer affordability to its weakest level since 2022, with implications for global agricultural output and food security. According to the World Food Programme, a prolonged conflict could push up to 45 million additional people into acute food insecurity this year, as farmers face rising input costs and declining yields.
Industrial and Precious Metals
Base metals such as aluminum, copper, and tin are projected to hit record highs, supported by strong industrial demand from data centers, electric vehicles, and renewable energy expansion. Precious metals are also expected to remain elevated, with average prices forecast to increase by 42 percent in 2026 as geopolitical uncertainty drives investors toward safe-haven assets.
Economic Consequences
The World Bank cautioned that these pressures will translate into higher inflation and weaker growth globally. Inflation in developing economies is projected at 5.1 percent in 2026, one percentage point higher than pre-war expectations and above 4.7 percent recorded last year. Growth in developing economies is now expected to slow to 3.6 percent in 2026, a 0.4 percentage point downward revision since January. Commodity importers and exporters alike are expected to feel the strain, with over 70 percent of importing economies and more than 60 percent of exporters likely to experience weaker-than-expected growth.
Severe Scenario and Volatility
In a more severe scenario, Brent crude could spike to $115 per barrel if energy infrastructure is further damaged and supply recovery is delayed, potentially pushing inflation in developing economies to 5.8 percent, the level last seen during the 2022 global energy crisis. Deputy Chief Economist and Director of the Prospects Group, Ayhan Kose, stated that the succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis. The report also noted that oil-price volatility tends to double during periods of heightened geopolitical tension, with a 1 percent drop in oil production pushing prices up by an average of 11.5 percent. Such shocks spill over into other markets, with impacts roughly 50 percent larger than under normal conditions. A 10 percent oil price increase driven by geopolitical shocks could raise natural gas prices by about 7 percent and fertilizer prices by over 5 percent, with effects typically peaking within a year, deepening risks to food security and poverty reduction worldwide.
