Energy prices to climb 32% this year as global shocks mount, World Bank says

Energy prices are set to rise by 32 per cent this year due to conflicts in the Middle East and Ukraine, driving up a broad set of commodity prices and threatening to worsen inflation, the World Bank said on Wednesday.

Global commodity prices are forecast to climb 23 per cent in 2026 due to rising energy prices and disrupted grain shipments in the Black Sea, the World Bank said in its latest Commodity Markets Outlook.

Brent crude is forecast to increase from an average of $69 per barrel in 2025 to $91 per barrel this year, before easing to $79 in 2027, it said. The global benchmark was trading at roughly $115 a barrel on Wednesday.

Overall commodity prices are set to ease by 7 per cent in 2027. Energy prices could rise further if there is an intensification in the Iran war or the damage to Russia's oil infrastructure persists, it said.

“Commodity markets are being hit by several major shocks at once,” said Ayhan Kose, the World Bank’s deputy chief economist.

“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.”

The International Monetary Fund earlier this month said it expected global headline inflation to rise to 4.7 per cent in 2026 before easing to 4.1 per cent next year, with energy importers facing the most challenging outlook.

The bank has so far provided $8.7 billion in support to 25 countries affected by the Iran war, the report said. Among them, 10 countries have reoriented existing programmes to finance crisis-related expenses and 19 have accessed new financing, with some countries using both.

The World Bank said it can scale up its support to $80 billion to $100 billion if the economic fallout persists, compared to its current estimate of $50 billion to $60 billion,

Global oil supply is projected to decline 5.2 per cent in 2026, representing the largest drop since the 1980s oil embargo. European natural gas prices are expected to jump by nearly 60 per cent due to disruptions in Middle East exports leading to more buyer competition.

Food commodity prices were set to climb by roughly 10 per cent and an additional 7 per cent in 2027 with Russia's invasion of Ukraine disrupting grain shipment.

In addition to continued conflicts in the Middle East and damage to Russia's oil infrastructure, a record El Nino and more disruptions to Black Sea grain shipments would lead to a so-called adverse scenario. This outlook would place Brent crude prices at an average of $105 a barrel in 2027, and food commodity prices 12 per cent higher than its baseline forecast.

Metals and minerals were projected to rise 25 per cent year-on-year, reaching a new high in 2026. Aluminium, copper, tin and other base metals are also on track for large gains.

Average fertiliser prices were forecast to increase 14 per cent in 2026, reflecting a surge in urea prices earlier this year, before returning to 2025 levels in 2027 on declining energy costs and greater access to ammonia and sulphur.