World Bank sees 23% commodity price surge in 2026, warns of inflation risk

WASHINGTON — Global commodity prices are set to surge 23% in 2026, the World Bank said Wednesday, as the Middle East war disrupts cargo shipping, Black Sea grain flows are curtailed and safe-haven demand lifts gold.

In its twice-yearly Commodity Markets Outlook, the bank said oil, natural gas, food and metals prices all rose sharply this year as global shocks mounted. It projected overall commodity prices would ease 7% in 2027, assuming no major escalation in conflicts affecting global supplies.

The outlook could deteriorate if the Middle East conflict ratchets up and damage to Russian oil infrastructure continues, the bank said. Continued shocks — including what is forecast to be the worst El Niño weather effect since 1950 — could keep food commodity prices elevated, raising the specter of higher inflation and tighter monetary policy.

Energy at multi-year highs

Energy prices are projected to surge 32% in 2026, reversing three consecutive years of decline, to their highest level since Russia's 2022 invasion of Ukraine. With global oil stocks depleted during the Middle East war, the bank said the world is more vulnerable to future supply shocks.

Global oil supply is expected to drop 5.2% in 2026, the biggest decline in four decades outside the 2020 global recession. Oil demand is forecast to fall 2.5% — the third-largest annual contraction on record, behind the 2020 COVID shock and the 1980 oil crisis. Brent crude is expected to average $92 a barrel this year, with prices remaining elevated in the near term because production is still expected to lag demand.

"Commodity markets are being hit by several major shocks at once," said Ayhan Kose, the World Bank's deputy chief economist. "Higher energy costs and trade disruptions are driving up prices across a broad range of commodities, threatening to worsen inflation, food insecurity, and economic growth."

Food, fertilizer and metals

Food commodity prices are set to rise just over 10% in 2026 and another 7%-plus in 2027, a cumulative increase of nearly 18%, driven by disruptions to grain shipments from hostilities between Russia and Ukraine in the Black Sea.

The bank outlined an adverse scenario in which a record El Niño, more Black Sea grain shipment disruptions, escalation in the Middle East conflict and ongoing damage to Russian oil infrastructure combine to push food prices 12% higher than expected. That could trigger a food crisis like the one seen in the early 2010s, when more than 40 million additional people were pushed into extreme poverty, the bank said.

Fertilizer prices are expected to rise 14% in 2026 following a surge in urea prices that has since eased, returning to 2025 levels in 2027.

Metals prices are projected to climb 25% in 2026 and hit a new high, with aluminum, copper and tin setting records on supply disruptions and strong demand from investments in renewable energy, electric vehicles and data centers. The bank expects metals prices to decline 3% in 2027.

Precious metals prices are forecast to surge 40% in 2026 as geopolitical and policy uncertainty drives demand for safe-haven assets. Prices are expected to moderate in 2027 but remain more than three times their 2015-2019 average, the bank said.

Response for vulnerable countries

The bank said it has already provided $8.7 billion in low-cost loans and other aid to 25 countries affected negatively by the Middle East war. That includes 10 countries that retooled existing programs to cover crisis-related expenses and 19 that tapped new resources, with some using both.

"The priority must be to protect the poorest people and support low-income countries already struggling with heavy debt burdens," Kose said. He said the World Bank Group has made $50 billion to $60 billion available through existing financing instruments, including $25 billion in pre-arranged financing, to help countries manage the effects of higher prices — funding that could support social safety nets, strengthen fiscal capacity and provide working capital and liquidity for businesses and farms.

The report was released two days before foreign ministers from the world's 20 largest economies are due to gather in Atlanta, Georgia, for a meeting focused on the wars in the Middle East and Ukraine.

The Economic Times, citing an AFP report, said energy and fertilizer prices have jumped since the US and Israel launched a war against Iran in late February, and that Iran has virtually choked the Strait of Hormuz, a key route for oil, gas and fertilizer. It added that the bank's forecasts are sharply higher than its April estimates.

The Economic Times also reported that the outlook found links between commodity price swings strengthen during economic or market stress, with industrial metals passing on the most volatility to other commodity groups and oil's role rising sharply after the conflict began.