Energy Prices Expected to Rise Significantly in 2026
Energy prices are predicted to jump by 24% in 2026, reaching their highest levels since the Russian invasion of Ukraine four years ago, according to a report released by the World Bank on Tuesday. This increase may occur if the pressing conflicts in the Middle East resolve by May.
In its latest Commodity Markets Outlook, the World Bank noted that prices could soar even higher if tensions in the region escalate, leading to longer disruptions in supply chains. The report outlined a scenario where shipping through the critical Strait of Hormuz would gradually return to normal by October, but the risks of rising prices remain significant.
Overall, commodity prices are expected to rise by 16% in 2026, fueled mainly by soaring energy and fertilizer costs, along with record prices for several essential metals. On Tuesday, oil prices continued to climb as the U.S.-Iran conflict stalled and the Strait of Hormuz, which previously accounted for 35% of the global crude oil trade, remained largely inaccessible.
The World Bank indicated that attacks on energy infrastructure and shipping disruptions in the region have led to one of the biggest oil supply shocks recorded. Brent crude oil prices were noted to be over 50% higher in mid-April compared to the beginning of the year and are expected to average around $86 per barrel in 2026—up from $69 in 2025.
If oil facilities suffer further damage, prices could peak as high as $115 per barrel this year. On Tuesday, Brent crude futures were trading at about $109 per barrel, reaching their highest close since early April.
World Bank economist Indermit Gill mentioned that the ongoing conflict is impacting the global economy through increased energy and food prices, leading to higher inflation. This situation particularly affects poorer nations and could worsen the financial challenges faced by those in developing countries.
Fertilizer prices are anticipated to rise by 31% in 2026, mainly due to a 60% increase in urea prices, which is crucial for crop production. This hike in fertilizer costs could strain food supplies, cut farmers’ incomes, and threaten future harvests. If the conflict continues, the World Food Programme estimates that 45 million additional people could experience acute food insecurity this year.
Inflation in developing economies is forecasted to average 5.1% in 2026, an increase from 4.7% last year, and significantly higher than pre-war predictions. Should the conflict persist, inflation could rise to around 5.8%.
Economic growth in developing regions is also set to slow, with projections of only 3.6% growth in 2026, down from an initial forecast of 4%. The challenges posed by the ongoing war continue to weigh heavily on global economic stability.
