Global commodity prices could rise by 23% by the end of 2026, driven by conflicts centred on Iran, disruptions to energy supplies, obstacles to grain transportation and climate-related pressures, the World Bank has warned.
The forecast was outlined in the bank’s Commodity Markets Outlook, released on Wednesday, October 28. The report also warned that rising prices could intensify inflation, worsen food insecurity and undermine global economic growth.
Ayhan Kose, the World Bank’s deputy chief economist, said commodity markets were facing several major shocks simultaneously. Higher energy costs and disruptions to trade were pushing up prices across a range of commodities, he said.
Food prices are projected to rise by 10% in 2026, followed by a further 7% increase in 2027. Disruptions to grain transportation caused by conflicts, the effects of El Niño and higher fuel and fertiliser costs are expected to contribute to the increase.
El Niño could raise temperatures across several regions, increasing the risk of floods, droughts and heatwaves that could disrupt agricultural production and put additional pressure on food supplies.
Energy prices forecast to rise 32%
The World Bank projects that energy prices will increase by 32% in 2026, although they could ease in 2027. The outlook assumes that the conflicts involving Iran and Ukraine do not escalate further.
The war involving Iran, the United States and Israel has disrupted energy and fertiliser supplies. Shipping restrictions and disruptions in the Strait of Hormuz have placed additional pressure on the transportation of oil, natural gas and fertilisers.
The report warned that a combination of more severe El Niño conditions, further disruptions to agricultural shipments due to the Russia-Ukraine war and additional increases in energy prices could trigger food shortages.
Under an adverse scenario, Brent crude oil could average $105 per barrel in 2027. Food prices could also rise 12% above the baseline forecast, exceeding the levels recorded in 2022.
Oil supply faces sharp decline
Global oil supply is projected to fall by 5.2% in 2026 amid the conflicts in the Middle East and the Russia-Ukraine war. Excluding the COVID-19 pandemic period, this would represent the steepest annual decline in more than four decades, according to the report.
Higher prices are also expected to reduce global oil consumption by 2.5% this year. The decline would rank as the third-largest annual drop, following the COVID-19 pandemic and the 1980 oil crisis.
The World Bank said it had provided $8.7 billion in emergency assistance to countries at risk since the outbreak of the war involving Iran this year.
Kose said protecting the poorest people from the effects of higher prices and supporting low-income countries facing debt pressures should be the immediate priorities.
The latest projections mark a significant upward revision from the World Bank’s forecasts issued in April, reflecting worsening risks to global food, energy and commodity markets.
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