World Bank forecasts 23% commodity price surge as Middle East war disrupts supply
The World Bank forecasts a 23% rise in global commodity prices in 2026 as the Middle East war, energy shortages and food-supply disruptions fuel inflation risks.
Global commodity prices are forecast to rise 23% in 2026 as the Middle East war, disruptions to grain shipments and growing demand for safe-haven assets push up energy, food and metals prices, the World Bank has warned.
In its latest Commodity Markets Outlook, released on Wednesday (October 28), the bank warned that simultaneous shocks to global supplies could worsen inflation, threaten food security and slow economic growth.
Although overall commodity prices are projected to decline by 7% in 2027, further military escalation, damage to Russian oil infrastructure and extreme weather could keep prices elevated.
The World Bank also warned that global markets had become more vulnerable to additional supply disruptions as the Middle East conflict depleted oil inventories.
Energy prices expected to jump 32%
Global energy prices are projected to increase 32% in 2026, reversing three consecutive years of declines and reaching their highest level since 2022, when Russia invaded Ukraine.
The World Bank expects global oil production to fall 5.2% this year, the steepest decline in more than four decades outside the recession caused by the Covid-19 pandemic in 2020.
Brent crude oil prices are forecast to average approximately US$92 a barrel in 2026 as supply shortages keep international energy markets under pressure.
The bank expects global oil consumption to decline 2.5%, the third-largest annual contraction on record, following the reductions experienced during the 2020 pandemic and the 1980 oil crisis.
However, weaker consumption has not been sufficient to offset the decline in production, forcing further withdrawals from oil inventories and leaving markets exposed to renewed disruptions.
Food prices face further pressure in 2027
Food commodity prices are forecast to rise by slightly more than 10% in 2026, followed by an increase exceeding 7% in 2027, bringing the cumulative rise over the two years to nearly 18%.
The increases reflect disruptions to grain shipments through the Black Sea linked to the Russia-Ukraine conflict, alongside higher energy and agricultural production costs.
Fertiliser prices are also expected to increase 14% in 2026, largely because of higher urea prices earlier in the year, before returning to their 2025 levels in 2027.
The World Bank warned that a combination of worsening conflicts and extreme weather could create a much more serious food-supply crisis.
In an adverse scenario involving an exceptionally strong El Niño, further disruption to Black Sea grain shipments, escalation in the Middle East and continuing damage to Russian oil facilities, food commodity prices could rise 12% above the bank's baseline forecast.
Such conditions could trigger a food crisis comparable to that experienced in the early 2010s, when more than 40 million additional people were pushed into extreme poverty.
The bank warned that prolonged food-price pressures could also contribute to higher inflation and prompt central banks to maintain tighter monetary policies.
Metals prices rise on energy transition and AI investment
Industrial metals are another major source of commodity-price increases.
The World Bank forecasts metals prices to rise 25% in 2026, reaching a new high as aluminium, copper and tin prices set records.
The increases have been driven by supply disruptions and strong demand linked to investment in renewable energy, electric vehicles and data centres.
These industries require substantial quantities of industrial metals for electricity infrastructure, manufacturing equipment and technology development.
Precious metals are expected to record even stronger growth, with prices projected to surge 40% in 2026.
The increase reflects heightened demand for safe-haven assets, particularly gold, as investors seek protection against geopolitical instability and uncertainty over economic policies.
The World Bank expects precious metals prices to moderate somewhat in 2027, although they are likely to remain elevated.
World Bank warns of wider economic consequences
Ayhan Kose, the World Bank's Deputy Chief Economist, warned that commodity markets were facing several major disruptions simultaneously.
He said higher energy costs and interruptions to trade were pushing up prices across a broad range of commodities, threatening inflation, food security and economic growth.
Kose stressed the importance of protecting vulnerable populations and supporting low-income countries already struggling with heavy debt burdens.
The World Bank reported that it had provided US$8.7 billion in low-cost loans and other assistance to 25 countries adversely affected by the Middle East conflict.
Of those countries, 10 had adjusted existing programmes to meet crisis-related costs, while 19 had accessed additional resources, with some countries using both approaches.
The assistance is intended to help governments manage economic pressures while maintaining support for vulnerable households and businesses.
The report was released ahead of a meeting of foreign ministers from the Group of 20 major economies in Atlanta, Georgia, where the conflicts in the Middle East and Ukraine are expected to feature prominently.
The World Bank warned that the outlook remained highly uncertain, with the possibility of further disruptions threatening to undermine the expected moderation in commodity prices next year.
Source: Reuters
