The World Bank has projected a significant rise in global energy prices, warning that costs could surge by around 24 percent in 2026, reaching their highest level since the onset of Russia’s large-scale invasion of Ukraine, if the conflict in the Middle East concludes by May.
In its latest report, the Bank noted that commodity prices could climb even further should regional tensions intensify and disruptions to global supply chains persist for longer than anticipated.
The outlook is based on a baseline scenario that assumes a gradual recovery in shipments through the strategic Strait of Hormuz, returning to near pre-conflict levels by October. However, the report emphasized that risks remain heavily tilted toward further price increases.
The World Bank expects overall commodity prices to rise by about 16 percent in 2026, driven primarily by higher energy and fertilizer costs, alongside record levels in several key metals.
It also highlighted that attacks on energy infrastructure and disruptions to maritime transport through the Strait of Hormuz have created what it described as the most severe oil supply shock in history.
Under the baseline forecast, Brent crude is expected to average around $86 per barrel in 2026, up from $69 in 2025. In a more severe scenario, where damage to oil and gas facilities continues and export recovery is delayed, prices could average as high as $115 per barrel.
Fertilizer prices are also projected to rise sharply by 31 percent in 2026, largely driven by a 60 percent surge in urea costs. The Bank warned this would place additional pressure on global food systems, reduce farmer incomes, and threaten agricultural productivity.
Inflation in developing economies is expected to reach 5.1 percent in 2026 under the baseline scenario, compared to 4.7 percent in the previous year. In the event of prolonged conflict, inflation could rise further to 5.8 percent.
The report concluded that continued geopolitical instability remains the key risk factor shaping global energy markets and inflation trends in the coming year.
