- Energy Prices to Jump 32% as Oil Supply Records Historic Decline
Global commodity prices are projected to rise by 23% in 2026 as conflict, trade disruption, depleted oil inventories and extreme weather combine to increase the cost of energy, food and industrial inputs, according to the World Bank Group’s latest Commodity Markets Outlook.
The projected increase marks a sharp reversal in several markets and presents governments with a difficult combination of renewed inflation, higher import costs and weaker economic growth.
Energy prices are forecast to rise by 32% in 2026, reversing three consecutive years of decline. Brent crude oil is expected to average $91 per barrel, up from $69 in 2025, before easing to $79 in 2027.
The outlook assumes that conflicts affecting global commodity supplies will not intensify significantly. That assumption is central to the forecasts because global oil inventories have already been drawn down, leaving the market with a weaker buffer against further disruptions.
The conflict in the Middle East and damage to Russia’s oil infrastructure are among the risks capable of pushing prices beyond the baseline projection.
Global oil supply is expected to contract by 5.20% in 2026, the largest annual decline in more than four decades outside the exceptional conditions created by the 2020 global recession.
Oil consumption is also forecast to fall by 2.50%, which would be the third-largest annual contraction on record after 2020 and 1980. High prices and supply shortages are already discouraging consumption, while electrification is reducing oil demand, particularly in China.
However, production is still expected to remain below consumption. The imbalance would require additional withdrawals from oil inventories, making the market increasingly sensitive to further military, political or infrastructure shocks.
The implication is that lower demand may not translate immediately into substantially lower prices. If supply declines more rapidly than consumption, energy costs could remain elevated even as global economic activity weakens.
That creates a particularly difficult environment for developing economies that import petroleum products. Higher oil prices affect more than fuel at the pump. They increase transportation, electricity, manufacturing and logistics costs, eventually spreading through consumer prices.
Governments may then face pressure to introduce fuel subsidies or tax reductions at a time when fiscal space is already constrained. Central banks may also be forced to keep interest rates higher for longer if energy-driven inflation becomes embedded in the broader economy.
“Commodity markets are being hit by several major shocks at once,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group.
He warned that higher energy costs and trade disruption could worsen inflation, food insecurity and economic growth, with the poorest households and highly indebted low-income countries facing the greatest pressure.
Food affordability is emerging as another major concern. Food commodity prices are expected to increase by approximately 10% in 2026 and a further 7% in 2027, producing a cumulative rise of about 18%.
The increase reflects disruptions to grain shipments, the threat posed by El Niño and the transmission of higher fuel and fertilizer costs into agricultural production.
Fertilizer prices alone are projected to rise by 14% in 2026 following an earlier surge in urea prices. Although fertilizer prices are expected to return to their 2025 level in 2027, the immediate increase could affect planting decisions, yields and farm profitability.
Higher fertilizer costs often force farmers to reduce application rates, particularly where credit and government support are limited. That response can weaken production and intensify the food-price pressure created by weather and shipping disruptions.
The interaction among energy, fertilizer, transportation and food prices is therefore more important than any one forecast. Expensive oil raises the cost of producing fertilizer, operating machinery and moving food from farms to markets.
The World Bank’s adverse scenario illustrates the scale of the risk. If the Middle East conflict escalates, attacks on Black Sea grain shipments intensify and a very strong El Niño damages harvests simultaneously, Brent crude could average $105 per barrel in 2027.
Under that scenario, food commodity prices could be 12% higher than projected in the baseline and exceed their 2022 level. The World Bank warned that such a combination could produce a food crisis comparable to conditions experienced in the early 2010s and push more people into extreme poverty.
The threat is especially serious because many developing countries have not fully rebuilt the fiscal and household buffers weakened by previous global shocks. High debt-service costs already absorb resources that could otherwise be used for food assistance, agricultural support or infrastructure.
Commodity-exporting countries may benefit from higher prices, but even those gains require careful interpretation.
Metals prices are forecast to reach a new high in 2026, rising by 25% as aluminium, copper and tin hit record levels. Demand is being driven by investment in renewable energy, electric vehicles and data centres, while supply disruptions are tightening market conditions.
Prices are subsequently projected to decline by 3% in 2027.
For mineral-producing economies, the increase could lift export earnings, fiscal revenue and foreign-exchange inflows. But the benefits will depend on production volumes, ownership structures, tax arrangements and the ability of governments to prevent windfall revenue from being consumed by short-term expenditure.
Precious metals are expected to record an even stronger increase of 40% in 2026. Demand for safe-haven assets remains elevated because of geopolitical and policy uncertainty.
Prices are projected to moderate in 2027 but remain more than three times their average between 2015 and 2019.
The surge presents an opportunity for gold-producing countries to strengthen reserves and export revenues. It may also intensify pressure for increased production, making responsible mining, environmental enforcement and transparent mineral trading even more important.
The World Bank’s special analysis shows that commodity markets become more interconnected during periods of economic and financial stress. A disruption in one market can therefore transmit volatility to others.
Industrial metals generally transmit the greatest volatility across commodity groups, but oil’s influence has increased markedly since the outbreak of the conflict in the Middle East.
This interconnectedness means governments cannot manage energy, agriculture and mining policies in isolation. Energy shocks influence food production, while metals demand is increasingly tied to electricity infrastructure, digitalisation and the energy transition.
To support countries facing higher prices, the World Bank Group has made between $50 billion and $60 billion available through existing instruments. This includes $25 billion in pre-arranged financing.
The resources can support social-protection programmes, fiscal capacity, farms and businesses requiring working capital or emergency liquidity. The institution is also seeking to mobilise more private investment alongside its financing and technical support.
The immediate policy challenge is to protect vulnerable households without creating expensive and poorly targeted interventions. Broad price subsidies may offer temporary relief but can weaken public finances and disproportionately benefit higher-income consumers.
Targeted cash transfers, school feeding, agricultural support and carefully designed transport assistance may provide more effective protection.
The 23% commodity-price increase is not simply another inflation forecast. It is a warning that energy security, food systems, public debt and geopolitical stability are becoming increasingly connected.
Countries that prepare early, target support carefully and use commodity windfalls responsibly will be better positioned to absorb the shock. Those that delay may discover that the cost of intervention rises as rapidly as the commodities they are trying to manage.
