Energy prices are projected to surge by 24 per cent 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, the World Bank Group’s Commodity Markets Outlook released on Tuesday said.

Overall commodity prices are forecast to rise by 16 per cent in 2026, driven by soaring energy and fertiliser prices and record-high prices for several key metals. The shock is expected to have serious implications for job creation and development, the analysis indicates.

Attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz, which handles about 35 per cent of global seaborne crude oil trade, have triggered a major oil supply shock, with an initial reduction in global oil supply of about 10 million barrels per day. Even after moderating from their recent peak, Brent crude prices remained more than 50 per cent higher in mid-April than at the start of the year. Brent 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.

“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,” World Bank Group Chief Economist and Senior Vice President for Development Economics Indermit Gill said. “The poorest people, who spend the highest share of their income on food and fuel, 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.”

Fertiliser prices are projected to increase 31 per cent in 2026, driven by a 60 per cent jump in urea prices. Fertiliser affordability is expected to 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 World Food Programme analysts.

Prices for base metals, including aluminium, copper, and tin, are also expected to reach all-time highs, reflecting strong demand from industries including data centres, electric vehicles, and renewable energy. Precious metals continue to break price and volatility records, with average prices forecast to increase 42 per cent in 2026 as geopolitical uncertainty fuels demand for safe-haven assets.

Rising commodity prices driven by these shocks are expected to increase inflation and dampen growth worldwide. In developing economies, inflation is projected to average 5.1 per cent in 2026 under the baseline assumptions, a full percentage point higher than expected before the war and up from 4.7 per cent last year. Growth in developing economies is also expected to deteriorate as higher prices for essentials weigh on incomes, while exports from the Middle East face sharp curbs. Developing economies are forecast to grow 3.6 per cent in 2026, a downward revision of 0.4 percentage points since January. Economies directly affected by conflict will be hardest hit, and 70 per cent of commodity importers and more than 60 per cent of commodity exporters worldwide could see weaker growth than projected in January.

Commodity prices could rise even higher if hostilities escalate or supply disruptions last longer than projected. Brent crude prices could average as high as $115 a barrel in 2026 in a scenario where critical oil and gas facilities suffer further damage and export volumes recover slowly. This would have ripple effects on prices for fertiliser and alternative energy sources such as biofuels. Under this scenario, inflation in developing economies could rise to 5.8 per cent this year, a level exceeded only in 2022 over the past decade.

“The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis,” World Bank Deputy Chief Economist and Director of the Prospects Group Ayhan Kose, stated. “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 at the most vulnerable households.”

The report’s special focus finds that oil price volatility during periods of rising geopolitical risk is roughly twice as high as during calmer periods, with a geopolitically driven 1 per cent decline in oil production pushing prices up by an average of 11.5 per cent. These effects also spill over into other key commodity markets, with an impact roughly 50 per cent larger than under normal market conditions. According to the report, a 10 per cent oil price increase triggered by a geopolitical supply shock leads to natural gas prices peaking at about seven per cent higher and fertiliser prices rising by more than five per cent. These peaks typically occur about a year after the initial shock, with adverse consequences for food security and poverty reduction.