Full Breakdown
World Bank Projects 24% Global Energy Price Surge in 2026 Amid Middle East Conflict
4/30/2026, 11:45:44 AM
Energy Price Surge Forecast and Supply Shock
World Bank’s Commodity Markets Outlook projects a 24 % jump in energy prices in 2026 – the sharpest rise since Russia’s 2022 invasion of Ukraine. It assumes Strait of Hormuz returns to pre-war shipping by October, yet risks remain tilted. Brent crude is forecast at $86 / bbl, with a worst-case ceiling of $115 / bbl after infrastructure attacks triggered an oil-supply shock, cutting output by about 10 million bpd.
Conflict-Driven Supply Disruption
The surge follows the U.S.–Iran war, which has hit energy facilities and shut the Strait of Hormuz, handling about 35 % of world crude oil, curtailing oil and fertilizer exports.
Conflicting Projections on Shipping Recovery
World Bank baseline assumes Strait of Hormuz shipping recovers by October, while other statements suggest the most acute disruptions could end by May, creating uncertainty in the timing of price relief.
Commodity Market Outlook and Economic Indicators
The outlook projects commodity prices up 16 % in 2026, driven by energy. Fertilizer costs rise 31 % as urea jumps 60 %. Inflation is seen at 5.1 % (potentially 5.8 % if war continues) and growth at 3.6 % versus 4 % pre-war. The World Food Programme warns 45 million more people could face acute food insecurity. Metal prices are at record highs, with precious metals expected to rise about 42 %.
Implications for Inflation, Growth and Food Security
Higher energy costs lift food prices and core inflation, tightening household budgets and raising borrowing costs. For debt-laden developing nations, the shock threatens fiscal stability and deepens poverty.
Official Statements
Gill said the war delivers “cumulative waves” of price pressure from energy to food to inflation. Ayhan Köse warned shocks have eroded fiscal space, urging targeted aid for vulnerable households. The bank calls for policy to contain spillovers.
Market and Analyst Concerns
Douglas Porter warned markets ignore bad news until it hits, questioning an “all-clear” signal, while Seth Carpenter said the unprecedented Hormuz closure embeds a risk premium that will keep oil prices high.
Verbatim Quotes
- “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,” — Indermit Gill, World Bank chief economist
- “There is a tendency in financial markets, which we think will be super rational, to ignore bad news until it's right on their doorstep,” — Douglas Porter, chief economist, BMO Capital Markets
- “The outright closure of the Strait of Hormuz is essentially ahistorical, and so we don't have a great model for this in the past,” — Seth Carpenter, global chief economist, Morgan Stanley
- “The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis,” — Ayhan Köse, World Bank deputy chief economist
Outlook and Policy Recommendations
The bank urges governments to target fiscal aid to vulnerable households while preserving fiscal space. Central banks are to hold rates steady as they monitor shipping in the Strait of Hormuz.
