World Bank warns energy prices will surge 24% in 2026 as Middle East war jolts global markets

Global energy prices are projected to surge 24% in 2026 to their highest level since Russia's invasion of Ukraine, the World Bank said on April 28 in its latest Commodity Markets Outlook.

The Middle East war has sent a severe shock through commodity markets, with overall prices forecast to rise 16% this year. The report warns of cascading effects on inflation, food security, and growth across developing economies.

Will energy prices go up because of the Middle East war?

Yes. The World Bank projects a 24% rise in energy prices in 2026, driven by attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz. These disruptions triggered what the bank described as the largest oil supply shock on record, with global supply initially falling by around 10 million barrels per day.

How high could oil prices go in 2026?

Brent crude is projected to average $86 per barrel in 2026, up from $69 in 2025, assuming disruptions ease from May and shipping flows gradually normalize by late 2026. If the conflict escalates or supply disruptions persist, prices could reach as high as $115 per barrel. Brent remained more than 50% above its start-of-year level in mid-April.

The Strait of Hormuz handles approximately 35% of global seaborne crude trade. Attacks on energy infrastructure and the resulting shipping disruptions have locked supplies away from global buyers. The World Bank described the resulting oil supply shock as the largest on record.

What does the Middle East war mean for food prices and food security?

Fertilizer prices are expected to rise 31% in 2026, driven by a 60% jump in urea prices, pushing affordability to its weakest point since 2022. Higher input costs are projected to erode farmers' incomes and weaken crop yields. The World Food Program estimates that up to 45 million more people could fall into acute food insecurity this year if the conflict continues.

Prices for base metals including aluminum, copper, and tin are expected to hit record highs. Precious metals could rise 42% as geopolitical uncertainty lifts demand for safe-haven assets. Rising commodity prices are forecast to push inflation in developing economies to 5.1% in 2026, up from 4.7% last year and one percentage point above pre-war projections. In a worse scenario, inflation could reach 5.8%.

"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," said Indermit Gill, the World Bank's chief economist. "The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest," he added.

How will the energy price surge affect growth in developing economies?

Developing economies are projected to expand 3.6% in 2026, a downward revision of 0.4 percentage points since January. Economies directly affected by the conflict are likely to see the sharpest slowdown. More than 70% of commodity-importing countries and over 60% of exporters could see weaker growth than previously expected.

"The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis," said Ayhan Kose, the World Bank's deputy chief economist. He urged governments to avoid broad, untargeted subsidies and focus instead on temporary, targeted support for the most vulnerable households. The report also noted that oil-price volatility tends to double during periods of geopolitical risk, amplifying risks to food security and poverty reduction.