Global Commodity Prices to Surge 23% by 2026 Amid Middle East Turmoil
World Bank warns of a 23% surge in global commodity prices by 2026 due to Middle East conflict, energy shortages, and weather risks.
The global economy is bracing for a significant shock as global commodity prices are projected to jump by 23 per cent in 2026. According to the latest Commodity Markets Outlook released by the World Bank Group, a volatile mix of Middle East conflicts, disrupted supply chains, and unpredictable weather patterns is creating a perfect storm for markets worldwide.
Energy Crisis: Oil Prices Set to Spike
The energy sector is expected to bear the brunt of this volatility, with prices forecast to surge by 32 per cent. The World Bank predicts that Brent crude will average USD 91 per barrel in 2026, a sharp climb from the USD 69 projected for 2025. While prices are expected to ease to USD 79 by 2027, the immediate outlook remains grim.
The report highlights a worrying trend in oil availability. Global oil supply is projected to plummet by 5.2 per cent in 2026—the most drastic decline in over forty years, excluding the 2020 recession. Meanwhile, consumption is expected to shrink by 2.5 per cent, driven by high costs and the shift toward electrification, particularly in China.
With oil inventories already depleted, the market has become dangerously vulnerable. Because production is expected to remain lower than consumption, the world will be forced to rely further on dwindling oil stocks.
Food Security and Agricultural Risks
It isn't just fuel that will become more expensive. Food commodity prices are expected to climb by approximately 10 per cent in 2026 and another 7 per cent in 2027, resulting in a cumulative increase of 18 per cent over two years.
Several factors are contributing to this food inflation:
- Shipment Disruptions: Conflict-driven interruptions in grain shipments.
- Climate Threats: The looming threat of El Niño affecting crop yields.
- Input Costs: Rising prices for fuel and fertilisers, with the latter projected to jump 14 per cent in 2026.
Metals and Precious Assets on the Rise
The demand for a greener future is paradoxically driving up costs. Metal prices are expected to climb 25 per cent in 2026, hitting new highs. This surge is fueled by the massive requirements for data centres, electric vehicles, and renewable energy infrastructure, coupled with ongoing supply disruptions.
Precious metals are expected to see an even more dramatic rise, with a projected 40 per cent increase as investors seek safety amid geopolitical instability and policy uncertainty.
The Warning from the World Bank
“Commodity markets are being hit by several major shocks at once,” stated Ayhan Kose, the World Bank's Deputy Chief Economist and Director of the Prospects Group.
Kose warned that these combined pressures—higher energy costs and trade bottlenecks—could trigger a ripple effect, worsening global inflation, increasing food insecurity, and stifling economic growth.
Worst-Case Scenarios
The World Bank cautioned that the current projections are based on baseline expectations. If the conflict in the Middle East escalates further or if Russian oil infrastructure sustains more damage, the numbers could climb even higher. In an adverse scenario, Brent crude could average USD 105 per barrel by 2027, and food prices could soar 12 per cent above the current forecasts, surpassing the peaks seen in 2022.
To mitigate these risks, the World Bank Group has announced that it has made USD 50 billion to USD 60 billion available through existing financing instruments, which includes USD 25 billion in pre-arranged financing to help vulnerable nations manage the impact of these price hikes.