WASHINGTON, April 28 (Reuters) – Energy prices are expected to rise 24% in 2026, reaching their highest level since Russia’s large-scale invasion of Ukraine four years ago, if the most severe disruptions caused by the war in the Middle East end in May, the World Bank said on Tuesday.
Commodity prices could rise even further if hostilities in the region escalate and supply disruptions last longer than expected, the global development bank said in the latest edition of its Commodity Market Outlook.
The bank said its baseline scenario assumes that the volumes of maritime transport through the crucial Strait of Hormuz will gradually return to pre-war levels by October, but it said risks are ‘skewed toward higher prices’.
The bank’s baseline scenario projects a 16% increase in overall commodity prices in 2026, driven by higher energy and fertilizer prices and record-high prices for several key metals.
Oil prices continued to rise on Tuesday as efforts to end the war led by the United States and Israel against Iran were halted and the Strait of Hormuz remained virtually closed, keeping energy, fertilizers, and other commodities from the world’s main Middle East producing region out of reach for global buyers.
Attacks on energy infrastructure and disruptions in maritime transport through the strait, which before the war carried 35% of global crude oil trade, triggered the largest oil supply shock on record, the World Bank said.
According to the World Bank, Brent crude prices remained more than 50% higher in mid-April than at the start of the year. The forecast is that Brent crude will average $86 per barrel in 2026, a sharp rise from $69 per barrel in 2025, the bank said.
Brent crude prices could average $115 per barrel this year if critical oil and gas facilities suffer further war damage and if export volumes take longer to recover, the bank said.
Brent crude futures for June were trading around $109 per barrel on Tuesday, after reaching their highest level since April 7 on Monday.
‘The war is impacting the global economy in cascading waves: first through higher energy prices, then through higher food prices, and finally through higher inflation, which will raise interest rates and make debt even more expensive,’ said World Bank Chief Economist Indermit Gill. The shock would hit the poorest hardest, worsening the troubles of highly indebted developing countries.
Pressure on Food Prices
Fertilizer prices are projected to rise 31% in 2026, driven by a 60% jump in the price of urea, the most widely used solid nitrogen fertilizer, which is produced by converting natural gas to produce ammonia and carbon dioxide.
The rise in fertilizer prices will add pressure on the food supply, eroding farmers’ incomes and threatening the productivity of future crops. The World Food Programme estimates that more than 45 million people could face acute food insecurity this year if the war continues for an extended period.
The World Bank reported that inflation in developing economies is projected to average 5.1% in 2026, under the baseline scenario, higher than the 4.7% recorded last year and one percentage point above pre-war forecasts. However, inflation could reach 5.8% in developing economies if the war lasts longer.
Growth will also suffer a major impact, the bank said. Developing economies are now projected to grow only 3.6% in 2026, below the 4% growth forecast made before the war.
