The World Bank Group warns the West Asia conflict could trigger the sharpest rise in energy prices in four years, reverberating across commodity markets, inflation and economic growth.
In its Commodity Markets Outlook, the bank projects energy prices to rise 24% in 2026, pushing them to their highest levels since the aftermath of Russia’s invasion of Ukraine. Overall commodity prices are expected to increase 16%, led by energy, fertilisers and metals.
The report highlights a severe oil supply shock from attacks on infrastructure and shipping disruptions through the Strait of Hormuz, which carries about 35% of global seaborne crude. Global oil supply has already faced an initial hit of nearly 10 million barrels per day. Benchmark Brent crude traded over 50% higher in mid-April than at the start of the year.
Assuming disruptions ease by mid-2026 and shipping normalises by late 2026, the World Bank now expects Brent to average $86 per barrel in 2026, up from $69 in 2025. However, risks are skewed to the upside: if damage to key oil and gas infrastructure persists, Brent could average as high as $115 per barrel.
Fertiliser prices are forecast to jump 31%, with urea rising about 60%, weakening affordability to levels last seen in 2022. The World Food Programme warns that prolonged conflict could push up to 45 million more people into acute food insecurity. Metals markets are also pressured: base metals such as aluminium, copper and tin may reach record highs on demand from data centres, electric vehicles and renewables, while precious metals could rise roughly 42% amid heightened geopolitical uncertainty.
Macro effects are mounting. Inflation in developing economies is now projected at 5.1% in 2026—about one percentage point higher than pre-war estimates—while growth forecasts have been cut to 3.6%, a 40 basis-point downgrade since January. Nearly 70% of commodity-importing economies and over 60% of exporters are likely to see weaker growth than previously expected.
“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. He added that the poorest, who spend the largest share of income on food and fuel, and heavily indebted developing economies will be hardest hit.
The report notes that oil price swings during geopolitical shocks are roughly twice as large: even a 1% drop in supply can push prices up by over 11%. Such shocks typically lift natural gas prices by up to 7% and fertiliser prices by more than 5%, often with about a one-year lag.
“With fiscal space sharply reduced after a decade of shocks, governments must resist broad, untargeted fiscal support that could distort markets and erode fiscal buffers,” said Ayhan Kose. The World Bank urges rapid, temporary support targeted to the most vulnerable rather than wide-ranging subsidies, warning that stretched fiscal buffers limit policymakers’ room to respond.
(Edited by: SHEERSH KAPOOR)
