Khaberni - The World Bank expects energy prices to rise by 24% this year, reaching their highest levels since the 2022 Ukraine war, amid the severe shock inflicted by the war in the Middle East (Iran War) on global commodity markets.
The latest report on Commodity Market Outlooks issued by the World Bank Group on Tuesday also expected that commodity prices in general would increase by 16% in 2026, driven by a sharp escalation in the prices of energy, fertilizers, and the record levels reached by a number of major metals. The analysis indicates that this shock will cast a heavy shadow on job creation and development.
The report mentioned that attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz, which accommodates about 35% of the global crude oil trade transported by sea, were the biggest shock in the history of oil supplies, initially reducing global oil supply by about 10 million barrels per day.
It added that after oil prices fell from their recent peak, Brent crude prices remained in mid-April more than 50% higher than they were at the beginning of the year, expecting the average price of Brent crude to reach $86 per barrel in 2026, a sharp rise from the $69 per barrel level recorded in 2025.
The report pointed out that these forecasts assume that the most severe disruptions will end in May, and that shipping movement through the Strait of Hormuz will gradually return to its pre-war levels by late 2026.
Indermit Gill, Vice President of Economic Development and Chief Economist of the World Bank Group said: "This war is causing severe damage to the global economy due to its cumulative and successive impacts: first, due to rising energy prices, then rising food prices, and finally rising inflation rates which will in turn increase interest rates and the cost of debt."
He added, "The greatest damage will be borne by the poor, who spend most of their income on food and fuel, along with developing economies already drowning in debt burdens. Here lies an indisputable truth: war is a wrecking ball to development."
The forecasts show that fertilizer prices will see a 31% increase in 2026, driven by a remarkable jump that reached 60% in urea prices.
It is also expected that the affordability of fertilizers will reach its worst levels since 2022, putting pressure on farmers' incomes and endangering future crop production.
If the conflict persists, these accumulated pressures on food supplies and households' ability to afford it may push up to an additional 45 million people into acute food insecurity during this year, according to the World Food Programme.
The forecasts also indicate that prices of basic metals, including aluminum, copper, and tin, will reach historical peaks, reflecting strong demand associated with industries such as data centers, electric vehicles, and renewable energy.
As for precious metals, they continue to record record prices and volatility, with forecasts of a 42% price increase in 2026, driven by growing demand for safe-haven assets amid geopolitical uncertainty.
Moreover, the rise in prices of basic commodities resulting from these shocks will lead to increased inflation and weaken growth around the world.
In developing economies, average inflation is now expected to reach 5.1% in 2026 according to baseline assumptions, a full percentage point higher than was expected before the war and an increase from 4.7% last year.
Growth in developing economies will also deteriorate as rising prices of essentials affect income, and exports from the Middle East will face sharp constraints.
It is also expected that developing economies will grow by 3.6% in 2026, down by 0.4 percentage points since January. Economies directly affected by the conflict will be among the most damaged, and 70% of countries importing basic commodities and more than 60% of countries exporting primary commodities around the world will experience weaker growth compared to January levels.
It should be noted that prices of basic commodities may further increase if hostilities escalate or supply disruptions due to the war persist longer than expected. and
It is possible that the average price of Brent crude could reach $115 per barrel in 2026 in a scenario where oil and gas facilities suffer further damage with slowed recovery of export volumes.
This, in turn, will have multiplier effects on fertilizer prices and alternative energy sources such as biofuels. In this scenario, the inflation rate in developing economies could rise to 5.8% this year, and over the past decade, the inflation rate has only exceeded this percentage in 2022.
Ayhan Kose, Vice Director of Development Prospects Group at the World Bank and a senior economic adviser, said: "The successive shocks over these ten years have sharply reduced the available fiscal space to respond to the current historic energy supply crisis."
He added: "Governments must resist the temptation to implement widespread public financial support measures without a clear goal," noting that "such measures can distort markets and erode fiscal reserves," and recommended "that governments focus on rapid and temporary support targeting the most vulnerable and needy households."
The report reveals that oil price volatility during periods of escalating geopolitical risk is about twice as high compared to periods of stability, as a 1% decline in oil production due to geopolitical factors is enough to raise the prices by an average of 11.5%.
The impacts of these shocks extend to the other major commodity markets with a severity about 50% greater than under normal conditions.
