Global commodity markets are bracing for a sharp upswing, with energy prices projected to jump 24% in 2026, marking their highest levels since the 2022 Russia-Ukraine conflict, according to the World Bank Group’s latest Commodity Markets Outlook. Overall commodity prices are forecast to rise 16%, driven by a potent mix of elevated energy, fertiliser and metals costs.
West Asia conflict triggers historic supply shock
Escalating tensions in West Asia have unleashed what the report calls the largest oil supply shock on record. Disruptions to critical energy infrastructure and shipping bottlenecks in the Strait of Hormuz, which carries nearly 35% of global seaborne crude, have slashed supply by an estimated 10 million barrels per day.
Even after easing from peak levels, Brent crude prices remained over 50% higher in mid-April compared to the start of the year. The benchmark is now projected to average $86 per barrel in 2026, up from $69 in 2025, assuming supply disruptions begin to ease by mid-year and normalize gradually by late 2026.
Fertiliser spike threatens food security
Fertilizer prices are expected to surge 31% in 2026, led by a steep 60% rise in urea prices. This sharp escalation is set to push fertiliser affordability to its weakest level since 2022, squeezing farm incomes and raising concerns over future crop yields.
The ripple effects could be severe. The World Food Programme warns that a prolonged conflict could push up to 45 million additional people into acute food insecurity this year.
Metals rally on structural demand
Base metals such as aluminum, copper, and tin are forecast to hit record highs, supported by sustained demand from data centres, electric vehicles, and renewable energy infrastructure. Meanwhile, precious metals are expected to climb 42% in 2026, as investors flock to safe-haven assets amid rising geopolitical uncertainty.
Inflation risks intensify, growth outlook dims
The surge in commodity prices is set to fuel inflation and dampen economic growth, particularly across developing economies. Inflation in these markets is now projected at 5.1% in 2026, up from earlier estimates and higher than last year’s 4.7%.
Growth forecasts have also been revised downward, with developing economies expected to expand by 3.6% in 2026, a 40 basis point cut since January. Countries directly impacted by conflict will bear the brunt, while a majority of both commodity importers and exporters could see weaker-than-expected growth.
Upside risks remain elevated
The outlook could deteriorate further if hostilities intensify or supply disruptions persist. In a high-risk scenario, Brent crude could average as much as $115 per barrel in 2026, triggering broader price spikes across fertilizers and alternative fuels such as biofuels. Inflation in developing economies could climb to 5.8%, levels last seen during the 2022 commodity shock.
Volatility amplified by geopolitics
The report highlights that oil price volatility nearly doubles during periods of geopolitical stress. A 1% drop in oil production due to geopolitical factors can drive prices up by an average of 11.5%, with spillover effects across commodities roughly 50% stronger than under normal conditions.
A 10% oil price increase triggered by such shocks can push natural gas prices up by about 7% and fertiliser prices by over 5%, typically peaking within a year, intensifying risks to food security and poverty reduction.
Bottom line
The unfolding crisis underlines how deeply interconnected energy, food, and financial systems have become. With geopolitical risks still elevated, global markets may be entering a prolonged phase of volatility, with significant implications for growth, inflation, and livelihoods worldwide.