In its latest Commodity Markets Outlook, the bank projects energy prices to rise by 24% in 2026, pushing them to their highest levels since the aftermath of the Russian invasion of Ukraine. Overall commodity prices are expected to increase 16%, driven by spikes in energy, fertilisers and metals.
The report flags a severe oil supply shock, driven by attacks on infrastructure and shipping disruptions through the Strait of Hormuz, a critical passage that carries roughly 35% of global seaborne crude oil trade. Global oil supply has already seen an initial hit of nearly 10 million barrels per day.
Benchmark crude prices have surged, with Brent trading more than 50% higher in mid-April compared to the start of the year. The World Bank now expects Brent to average $86 per barrel in 2026, up from $69 in 2025, assuming disruptions ease by mid-year and shipping normalises by late 2026. However, risks remain skewed to the upside. In a scenario where damage to key oil and gas infrastructure persists, Brent prices could average as high as $115 per barrel this year.
The impact is not limited to energy. Fertiliser prices are forecast to jump 31%, led by a 60% surge in urea prices, pushing affordability to its weakest level since 2022. This could have significant implications for global food supply, with the World Food Programme warning that up to 45 million additional people could fall into acute food insecurity if the conflict drags on.
Metals markets are also under pressure, with base metals such as aluminium, copper and tin expected to hit record highs, supported by strong demand from sectors like data centres, electric vehicles and renewable energy. Precious metals, meanwhile, are projected to rise 42% amid heightened geopolitical uncertainty.
The broader macroeconomic fallout is becoming increasingly evident. Inflation in developing economies is now projected at 5.1% in 2026—one percentage point higher than pre-war estimates—while growth forecasts have been cut to 3.6%, a downward revision of 40 basis points since January.
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The impact is expected to be widespread, with nearly 70% of commodity-importing economies and over 60% of exporters likely to see weaker growth than previously anticipated.
“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 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 report also highlights how geopolitical shocks amplify market volatility. Oil price swings during such periods are roughly twice as large, with even a 1% drop in supply capable of pushing prices up by over 11%. These shocks spill over into other markets, lifting natural gas prices by up to 7% and fertiliser prices by over 5%, typically with a lag of about a year.
“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. “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.”
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With fiscal buffers already stretched after successive global shocks, policymakers face limited room to respond. The World Bank has cautioned governments against broad-based subsidies, urging instead targeted support for vulnerable households.
