Energy prices are projected to surge by 24% this year to their highest level since Russia’s invasion of Ukraine in 2022, as the war in the Middle East sends a severe shock through global 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 soaring energy and fertiliser prices and record-high prices for several key metals.
According to the World Bank, the shock will have serious implications for job creation and development, the analysis indicates.
The Washington-based lender stated that attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz have triggered the largest oil supply shock on record, with an initial reduction in global oil supply of about 10 million barrels per day.
Even after moderating from their recent peak, 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 $86 a barrel in 2026, up sharply from $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.
World Bank Group’s Chief Economist and Senior Vice President for Development Economics said Indermit Gill, said: “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.”
The Bretton Wood Institute projects that fertiliser prices are expected to increase by 31% in 2026, driven by a 60% jump in urea prices.
According to the report, fertiliser affordability will fall to its worst level since 2022, eroding farmers’ incomes and threatening future crop yields.
“If the conflict proves more prolonged, these pressures on food supply and affordability could push up to 45 million more people into acute food insecurity this year, according to the World Food Programme,” it said.
The development finance institution pointed out that growth in developing economies will also deteriorate as higher prices for essentials weigh on incomes and exports from the Middle East face sharp curbs.
“Developing economies are expected to grow by 3.6% in 2026, a downward revision of 0.4 percentage point since January. Economies directly impacted by conflict will be hardest hit, and 70% of commodity importers and more than 60% of commodity exporters worldwide could see weaker growth than was projected in January.
“Commodity prices, the report stated, could rise even higher if hostilities escalate or supply disruptions from the war last longer than projected.
“The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group.
“Governments must resist the temptation of broad, untargeted fiscal support measures that could distort markets and erode fiscal buffers. Instead, they should focus on rapid, temporary support targeted to the most vulnerable households,” it added.
…Jalili to take over Iran’s nuclear talks
Meanwhile, further signs of turmoil are emerging in Iran’s U.S. negotiating team as hardliner, Mohammad Bagher Ghalibaf, looks set to be replaced by a veteran conservative known for rejecting nuclear concessions, according to reports.
Iran International reported that Saeed Jalili, 60, who already leads what has been described as a “shadow government”, is expected to succeed Ghalibaf following his sudden departure amid internal disputes.
Jalili also heads Iran’s ultra-hardline faction known as the Stability Front (Paydari), which is known to be a “bastion of ultraconservatism in Iran,” according to reports.
Ali Safavi, an official with the Iranian opposition coalition, the National Council of Resistance of Iran (NCRI), told Fox News Digital that Jalili “has evolved from a nuclear negotiator to an influential actor within the regime.”
Ghalibaf was reportedly forced to step down after attempting to bring the nuclear issue into talks with Washington, a move that triggered backlash within Iran’s political establishment.
President Donald Trump had called off plans for U.S. envoys to travel to Pakistan for peace talks with Iran on April 25.
The rivalry between Jalili and Ghalibaf is said to span more than a decade and intensified during the 2024 elections, when Jalili refused to step aside, contributing to the victory of President Masoud Pezeshkian.
Safavi said” “The increased visibility of latent divisions stems from recurring nationwide uprisings, deep economic crises and the pressures of war, all of which have intensified internal feuding.”
“Far from signaling transformation, these developments reflect accelerating erosion and mounting pressure, deepening fractures and leaving the regime ever weaker and more vulnerable,” he added.
Foreign Minister Abbas Araghchi is also seeking a continued leading role in negotiations, highlighting competing centers of influence over Iran’s diplomatic strategy, sources said.
Araghchi is in Islamabad, Pakistan, after returning from a short trip to Muscat, Oman, where he is holding high-level diplomatic talks on the conflict. Reports indicate Araghchi will travel to Moscow.
Jalili’s potential appointment, however, signals a hardening of Iran’s stance, with more emphasis on resistance over compromise.
“Within this regime, there are a number of constants espoused by all factions,” Safavi said before highlighting that these were “repression, the export of terrorism and the pursuit of nuclear weapons.”
The factions all ultimately move along a common path: the preservation of power. They differ in methods, not in objectives,” Safavi cautioned.
Jalili, meanwhile, served as Iran’s top nuclear negotiator from 2007 to 2013 under President Mahmoud Ahmadinejad and later ran for president three times. He also served as secretary of the Supreme National Security Council.
A former member of the Islamic Revolutionary Guard Corps (IRGC), Jalili lost his right leg at 21 during the Iran-Iraq War, earning him the title of “Living Martyr”.
The Paydari Front, which he is associated with, opposes engagement with the West, particularly the 2015 nuclear deal, and advocates a doctrine of “active resistance.”
During Hassan Rouhani’s presidency, Jalili also established a “shadow government” to counter the administration’s policies, especially the nuclear deal.
On April 7, he wrote on X: “Yes, ‘infrastructure’ is on the verge of collapse; the infrastructure of domination and the American order. And after that, a better foundation will be built.”
A day earlier, he posted: “‘Shut up’ is not the appropriate response to Trump’s ramblings; let him speak more. Nothing is more effective in laying bare the true nature of the United States than Trump’s outbursts.
“In dealing with this regime,” Safavi said, “we must bear in mind that in the 45 years since the mullahs consolidated their rule in 1981 by crushing all peaceful political life, so-called reformists have governed for nearly half that time, presiding over some of its darkest crimes.”
“These include the 1988 massacre of 30,000 political prisoners, the assassination of dissidents abroad, the chain murders of intellectuals inside Iran and the relentless pursuit of nuclear weapons.”
