Key Points:
- Energy prices will jump 24% this year due to the ongoing war in the Middle East.
- Brent crude oil could average $115 a barrel if critical infrastructure suffers more damage.
- Fertilizer prices will spike 31%, threatening food supplies and placing 45 million people at risk of hunger.
- Developing economies face massive economic hits, with growth slowing to 3.6% and inflation rising to 5.1%.
The World Bank issued a stark warning on Tuesday about the global economy. Energy prices will surge by 24% in 2026, reaching their highest point since Russia invaded Ukraine four years ago. This massive price jump depends on the most acute disruptions from the war between the United States and Iran ending in May. If the fighting escalates and supply issues drag on longer than expected, the global development bank expects commodity prices to climb even higher.
The bank detailed these predictions in its latest Commodity Markets Outlook report. For its baseline scenario, the organization assumes that shipping volumes through the vital Strait of Hormuz will slowly return to normal pre-war levels by October. However, analysts strongly warn that the risks tilt heavily toward higher prices. Overall, the bank expects total commodity prices to rise by 16% in 2026. Soaring energy costs, expensive fertilizers, and record-high metal prices drive this massive increase.
Oil prices continued their steady climb on Tuesday. Diplomatic efforts to end the war completely stalled, and the Strait of Hormuz remained shut to most commercial traffic. This closure keeps vital energy supplies, fertilizer, and other raw materials trapped inside the Middle East, far out of reach for desperate global buyers.
Before the war started, the Strait of Hormuz handled 35% of the entire global seaborne crude oil trade. The recent attacks on energy infrastructure and shipping routes triggered the largest oil supply shock on record. The World Bank noted that Brent crude oil prices were more than 50% higher in mid-April than on the first day of the year.
For 2026, the bank expects Brent oil to average $86 a barrel. This represents a sharp jump from the $ 69-per-barrel average recorded in 2025. Futures contracts for June traded around $109 a barrel on Tuesday, right after hitting their highest closing price since April 7 on Monday afternoon.
The situation could easily grow worse. The bank warned that Brent oil prices could average a staggering $115 a barrel this year. This worst-case scenario happens if bombs destroy more critical oil and gas facilities, causing export volumes to recover at a much slower pace.
World Bank chief economist Indermit Gill explained the cascading damage. He said the war hits the global economy in cumulative waves. First, energy prices go up. Then, food prices rise. Finally, higher inflation forces central banks to raise interest rates, making existing debt much more expensive. Gill emphasized that this economic shock hits the poorest people the hardest and adds immense pain to highly indebted developing countries.
The energy crisis directly threatens the global food supply. The bank projects fertilizer prices will increase by 31% in 2026. A massive 60% jump in urea prices drives this trend. Farmers rely heavily on urea as their primary solid nitrogen fertilizer. Factories produce urea by converting natural gas into ammonia and carbon dioxide, making the fertilizer market highly vulnerable to gas shortages.
Surging fertilizer costs put intense pressure on the global food supply. Expensive fertilizer eats away at farmers’ incomes and threatens future crop yields. Farmers simply grow less food when they cannot afford to fertilize their fields. Because of this dynamic, the World Food Program estimates that 45 million more people will face acute food insecurity this year if the war continues for a long time.
Developing economies carry the heaviest burden of this crisis. The World Bank predicts inflation in developing nations will average 5.1% in 2026 under the baseline scenario. This marks a solid increase from the 4.7% inflation rate seen last year. It also sits a full percentage point higher than what economists forecast before the war began. If the war drags on, inflation could climb as high as 5.8% in these vulnerable countries.
Economic growth will also take a massive hit. The bank lowered its growth projections for developing economies to just 3.6% for 2026. Before the fighting started, economists expected a much healthier 4% growth rate. These numbers paint a grim picture for nations that desperately need economic expansion to lift their citizens out of poverty.
