Global commodity prices are projected to jump 23 percent by the end of 2026 as concurrent military conflicts and severe weather patterns disrupt international supply chains, according to a warning issued by the World Bank in its latest Commodity Markets Outlook report released on Wednesday.
The report highlights that energy costs have climbed to four-year highs following the outbreak of war on Iran, while food prices are being squeezed by both regional fighting and the ongoing impact of the El Nino phenomenon. Ayhan Kose, the World Bank's deputy chief economist, stated that commodity markets are currently enduring several major shocks simultaneously, warning that escalating energy costs and trade bottlenecks threaten to exacerbate global inflation, food insecurity, and economic stagnation.
Food prices are forecasted to increase by 10 percent in 2026 and a further seven percent the following year. This upward pressure stems from war-damaged grain supply corridors, record fuel and fertilizer costs, and extreme weather driven by El Nino. The naturally occurring climate pattern is bringing elevated global temperatures this year, compounding man-made climate change and threatening agricultural producers with severe flooding, droughts, and heat stress across key growing regions.
Energy prices are expected to rise by 32 percent this year before moderating in 2027, provided that military hostilities involving Iran and Ukraine do not intensify further. Global energy and fertilizer markets experienced extreme surges after the United States and Israel launched a war against Iran in late February. In response, Iran carried out strikes against U.S. allies across the Middle East and virtually choked off the Strait of Hormuz, a critical maritime transit route for crude oil, natural gas, and fertilizer exports.
The World Bank warned that a compound crisis—combining an unusually severe El Nino, intensified attacks on Black Sea grain shipments during the Russia-Ukraine war, and further energy price spikes from the Middle East conflict—could plunge vulnerable regions into a severe food crisis. Under an adverse risk scenario where these events occur simultaneously, Brent crude oil prices could average $105 per barrel in 2027. Consequently, food commodity prices could exceed baseline predictions by 12 percent, pushing them above the peak levels recorded in 2022.
To cushion the economic blow, the World Bank has disbursed $8.7 billion in emergency support to vulnerable nations since the war on Iran began. Kose emphasized that international priorities must focus on protecting the most impoverished populations and assisting low-income countries already burdened by heavy debt obligations.
Furthermore, global oil supply is slated to decrease by 5.2 percent in 2026, marking the steepest drop in over four decades outside of the COVID-19 pandemic. This contraction is primarily driven by the combined disruptions of Middle Eastern warfare and the ongoing Russia-Ukraine war. The World Bank noted that oil price projections would be even higher if global oil consumption were not expected to drop by 2.5 percent this year—the third-largest decline on record following the pandemic and the 1980 oil crisis. Overall, the updated forecasts for food, energy, and general commodity prices reflect a sharp upward revision from the bank's previous assessment published in April.
