Washington, Apr 29: The World Bank has projected a 24 per cent increase in energy prices this year due to the ongoing conflict involving Iran, marking the steepest rise since Russia’s invasion of Ukraine in 2022.
The war in the Middle East has sent shockwaves through global commodity markets, with energy and fertiliser prices expected to rise by 16 per cent, according to the World Bank Group’s Commodity Markets Outlook released recently.
The analysis warns that the shock will have serious implications for job creation and economic development.
Attacks on energy infrastructure and disruptions to shipping in the Strait of Hormuz—which handles about 35 per cent of global seaborne crude oil trade—have triggered one of the largest oil supply shocks on record, with an initial reduction of around 10 million barrels per day. Brent crude prices were more than 50 per cent higher in mid-April compared to the start of the year and are forecast to average $86 per barrel in 2026, up from $69 in 2025.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then food prices, and finally inflation, which will push up interest rates and make debt more expensive. The poorest people will be hit the hardest,” said Indermit Gill, adding that “war is development in reverse.”
Fertiliser prices are projected to rise by 31 per cent, driven by a 60 per cent jump in urea prices. If the conflict persists, up to 45 million more people could fall into acute food insecurity. Prices of base metals—including aluminium, copper, and tin—are also expected to reach all-time highs, the report said.
Precious metals are rallying amid geopolitical uncertainty, with average prices forecast to rise 42 per cent in 2026 as investors seek safe-haven assets.
The World Bank said rising commodity prices would push up inflation and weaken global growth. Growth across developing economies is projected at 3.6 per cent in 2026, a downgrade of 0.4 percentage points from earlier estimates.
Countries directly affected by conflict are expected to suffer the most. The report noted that 70 per cent of commodity importers and more than 60 per cent of exporters could see weaker growth than previously projected.
If hostilities intensify or supply disruptions persist, Brent crude could average as high as $115 per barrel in 2026, the bank warned. Higher oil prices are also expected to impact fertiliser and alternative fuels such as biofuels.
“The succession of shocks over the past decade has significantly reduced the fiscal space available to respond to the current crisis,” said Ayhan Kose. He urged governments to avoid broad, untargeted fiscal measures and instead focus on temporary, targeted support for vulnerable households.
The report also noted that a 1 per cent geopolitically driven decline in oil production typically raises prices by 11.5 per cent, with spillover effects on other commodities being significantly higher than under normal conditions.
It warned that these delayed shocks could further undermine global food security and poverty reduction efforts.
