World Bank forecasts 24% energy price spike in 2026 – biggest since 2022

Global energy markets are headed for their sharpest price shock in four years. According to the World Bank’s latest Commodity Markets Outlook, energy prices are forecast to climb 24% in 2026 – the largest annual jump since 2022.

The surge follows major disruptions in one of the world’s most critical shipping routes. The Strait of Hormuz, through which roughly 35% of seaborne crude oil passes, has seen significant supply interruptions. Global oil supply dropped by an initial 10 million barrels per day, the largest single supply shock on record. Even after easing from recent peaks, Brent crude prices in mid-April stood more than 50% above their level at the start of the year.

The World Bank’s baseline scenario assumes the most acute disruptions end in May and that shipping through the strait gradually returns to pre-disruption levels by late 2026. Under that forecast, Brent will average 86abarrelthisyear–upsharplyfrom86abarrelthisyear–upsharplyfrom69 in 2025. Overall commodity prices are projected to rise 16%, driven by energy, fertilisers and record-high metals.

Fertiliser prices are expected to jump 31%, with urea up 60%. Affordability will fall to its worst level since 2022, squeezing farmers and threatening future crop yields. The World Food Programme estimates that if food supply pressures continue, up to 45 million more people could face acute food insecurity this year.

Base metals – aluminium, copper, tin – are forecast to reach all-time highs, lifted by demand from data centres, electric vehicles and renewable energy. Precious metals have also broken records, with average prices forecast to rise 42% in 2026 as investors seek safe havens.

For developing economies, inflation is now projected at 5.1% in 2026 – a full percentage point above pre-shock forecasts, and up from 4.7% last year. Growth has been revised down to 3.6%, a 0.4 point cut since January. Seventy per cent of commodity importers and more than 60% of exporters are expected to grow more slowly than previously forecast.

“The poorest people, who spend the largest share of their income on food and fuels, will be hit the hardest,” said Indermit Gill, the World Bank’s Chief Economist. “All of this is a reminder of a stark truth: conflict is development in reverse.”

A more severe scenario is also modelled. If critical facilities suffer further damage and export volumes recover slowly, Brent could average as high as $115 a barrel. That would push developing-economy inflation to 5.8% – a level exceeded only in 2022 over the past decade.

Ayhan Kose, the World Bank’s Deputy Chief Economist, urged governments to avoid broad, untargeted spending. “Instead, they should focus on rapid, temporary support targeted to the most vulnerable households,” he said.

The report’s special focus finds that oil-price volatility during supply disruptions is roughly twice as high as during calm periods. A 1% drop in oil production pushes prices up by an average of 11.5%, with spillovers to natural gas and fertiliser markets about 50% larger than normal. A 10% oil price increase triggered by supply shocks leads to natural gas peaks of about 7% and fertiliser peaks above 5% – typically arriving a year later, with lasting consequences for food security.