Higher inflation, slower growth, coming our way
World Bank sees energy costs up 24%, commodities 16%, this year due to Middle East conflict.
Energy prices are projected to surge by 24% in 2026 as the war in the Middle East rocks commodity markets, according to the World Bank Group's latest Commodity Markets Outlook.
Overall commodity prices are forecast to rise 16% in 2026, driven by rising energy and fertiliser prices and record-high prices for several key metals.
Damage to energy infrastructure and shipping disruptions in the Strait of Hormuz, which handles about 35% of global seaborne crude oil trade, have triggered the largest oil supply shock on record, with an initial reduction in global oil supply of about 10mln barrels per day.
Brent oil prices remained more than 50% higher in mid-April than they were at the start of the year. Brent oil is forecast to average US$86 a barrel in 2026, up sharply from US$69 a barrel in 2025.
These forecasts assume that the most acute disruptions end in May and that shipping through the Strait of Hormuz gradually returns to pre-war levels 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.
Fertiliser prices are projected to increase by 31% in 2026, driven by a 60% jump in urea prices.
Prices for base metals, including aluminium, copper and tin, are also expected to reach all-time highs, reflecting strong demand related to industries including data centres, electric vehicles, and renewable energy.
Precious metals continue to break price and volatility records, with average prices forecast to increase 42% in 2026, as geopolitical uncertainty fuels demand for safe-haven assets.
Rising commodity prices will increase inflation and dampen growth worldwide. Commodity prices could rise even higher if hostilities escalate or supply disruptions from the war last longer than projected.
Brent oil prices could average as high as US$115 a barrel in 2026 in a scenario where critical oil and gas facilities suffer more damage and export volumes are slow to recover. This in turn would have ripple effects on prices for fertiliser and alternative energy sources such as biofuels.
