World Bank Warns of 32% Energy Price Surge Amidst Escalating Global Crises

The World Bank has issued a stark warning, predicting a significant 32% increase in energy prices this year. This surge is attributed to ongoing conflicts in the Middle East and Ukraine, which are not only driving up energy costs but also impacting a wide array of commodity prices and exacerbating global inflation.

In its latest Commodity Markets Outlook, the World Bank forecasts that global commodity prices will climb by 23% in 2026. This projection is heavily influenced by the anticipated rise in energy prices and the continued disruption of grain shipments from the Black Sea region.

Specifically, Brent crude oil is expected to see a substantial rise, with average prices increasing from $69 per barrel in 2025 to $91 per barrel this year. While prices are projected to ease to $79 per barrel in 2027, the current trading price on Wednesday stood at approximately $115 a barrel.

Overall commodity prices are anticipated to decrease by 7% in 2027. However, the World Bank noted that energy prices could escalate further if the conflict in Iran intensifies or if damage to Russia's oil infrastructure persists.

Ayhan Kose, the World Bank’s deputy chief economist, commented on the situation, stating, “Commodity markets are being hit by several major shocks at once. Higher energy costs and trade disruptions are driving up prices across a broad range of commodities, threatening to worsen inflation, food insecurity and economic growth.”

This outlook aligns with recent projections from the International Monetary Fund, which anticipates global headline inflation to reach 4.7% in 2026 before moderating to 4.1% next year. Energy importers are expected to face the most challenging economic conditions.

The World Bank has already committed $8.7 billion in support to 25 countries affected by the Iran war. Of these, 10 nations have repurposed existing programs to cover crisis-related expenses, and 19 have secured new financing, with some utilizing both avenues. The institution indicated its capacity to increase support to between $80 billion and $100 billion if the economic repercussions continue, a significant increase from the current estimated $50 billion to $60 billion.

Global oil supply is projected to contract by 5.2% in 2026, marking the most substantial decline since the oil embargo of the 1980s. European natural gas prices are expected to surge by nearly 60% due to Middle Eastern export disruptions, intensifying competition among buyers.

Food commodity prices are forecasted to rise by approximately 10% this year and an additional 7% in 2027, largely due to Russia's invasion of Ukraine disrupting grain shipments. An adverse scenario, potentially triggered by continued Middle Eastern conflicts, persistent damage to Russian oil infrastructure, a record El Nino, and further Black Sea grain shipment disruptions, could see Brent crude prices average $105 a barrel in 2027 and food commodity prices rise 12% above the baseline forecast.

Metals and minerals are projected to increase by 25% year-on-year, reaching a new peak in 2026. Base metals such as aluminium, copper, and tin are also on track for significant gains. Average fertilizer prices are expected to rise 14% in 2026, driven by a surge in urea prices earlier this year, before returning to 2025 levels in 2027 as energy costs decline and access to ammonia and sulphur improves.