The World Bank has projected a sharp surge in global energy prices, cautioning that they may rise by 24 percent this year to their highest levels since the start of the Russia-Ukraine War.
The forecast, outlined in its latest Commodity Markets Outlook report, underscores growing instability in global supply chains and intensifying geopolitical tensions.
According to the report, the upward trajectory in prices could accelerate further if conflict-driven disruptions persist, particularly in critical transit routes and energy infrastructure.
The baseline scenario assumes a gradual normalization of shipping flows through the Strait of Hormuz by October, though risks remain elevated.
Commodity prices climb on supply disruptions
The World Bank anticipates a 16 percent increase in overall commodity prices this year. This surge is being driven by elevated energy costs, rising fertilizer prices, and record highs in several industrial metals.
Analysts point to ongoing attacks on energy infrastructure and logistical bottlenecks as key drivers behind the sharp uptick.
The report characterizes the current situation as the most significant oil supply shock in modern history, noting that prior to the conflict, roughly 35 percent of the world’s seaborne crude oil passed through the Strait of Hormuz.
Disruptions in this corridor have reverberated across global markets, tightening supply and pushing prices higher.
Oil price outlook signals continued pressure
Benchmark crude prices remain under sustained pressure. The World Bank noted that Brent crude oil prices were more than 50 percent higher in mid-April compared to the start of the year.
Under its base case, the Bank expects average Brent prices to reach $86 per barrel in 2026, up from $69 in 2025.
However, the outlook carries significant upside risk.
In a worst-case scenario involving further damage to key oil and gas infrastructure and prolonged export disruptions, prices could surge to as high as $115 per barrel this year.
Indermit Gill Chief Economist & Senior VP for Development Economics World Bank Group
“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. 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.”
Fertilizer costs set to spike
The ripple effects are expected to extend into agriculture, with fertilizer prices projected to rise by 31 percent in 2026.
A major contributor is the anticipated 60 percent surge in urea prices, driven by higher natural gas costs—a key input in ammonia production.
This increase could place additional strain on global food systems, particularly in developing economies that are highly sensitive to input cost fluctuations.
Inflation and growth outlook deteriorates
The World Bank warned that inflationary pressures are likely to intensify across developing markets. Average inflation is projected to reach 5.1 percent in 2026, up from 4.7 percent last year and notably higher than pre-war expectations. Should the conflict persist, inflation could climb further to 5.8 percent.
At the same time, economic growth is expected to slow. Developing economies are now forecast to expand by approximately 3.6 percent this year, compared to earlier projections of 4 percent, reflecting the broader economic drag from elevated commodity prices and persistent uncertainty.
The World Bank’s assessment highlights a fragile global economic environment where geopolitical risks continue to shape market outcomes.
With energy markets at the center of the disruption, the path ahead remains highly contingent on the duration and intensity of the conflict, as well as the resilience of global supply chains.
