The conflict in the Middle East has drawn down oil inventories and is set to push energy prices to a four-year high. Meanwhile, disrupted grain shipments and El Niño threaten harvests and food affordability. With oil stocks depleted, the world is more exposed to further supply shocks. As countries respond to these challenges, the World Bank Group is making financing and support available through its existing instruments, while scaling up its ability to mobilize private capital alongside its own resources.    Dry bulk market     Energy prices are projected to rise 32% in 2026, reversing three years of declines, before moderating in 2027. Brent is forecast to average $91 per barrel in 2026, up from $69 in 2025, then ease to $79 in 2027. Food commodity prices are expected to rise about 10% in 2026 and another 7% in 2027—a cumulative increase of 18%—as conflict disrupts grain shipments, El Niño threatens harvests, and high fuel and fertilizer prices increase agricultural costs. Overall commodity prices are forecast to rise 23% this year before declining by 7% in 2027.     The forecasts assume no major intensification of conflicts affecting global commodity supplies. However, energy prices could rise further if the conflict in the Middle East escalates and damage to Russia’s oil infrastructure persists. At the same time, higher-than-expected energy prices, attacks on Black Sea grain shipments, and a very strong El Niño could combine to produce a food crisis that pushes more people into extreme poverty, similar to the situation during the early 2010s. In an adverse scenario in which these risks materialize together, Brent could average $105 a barrel in 2027 and food commodity prices could be 12% higher than expected in the baseline forecast, surpassing their level in 2022.     “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. “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. The priority must be to protect the poorest people and support low-income countries already struggling with heavy debt burdens.”     To support countries as they manage the fallout from higher prices, the World Bank Group has made $50 billion to $60 billion available through existing instruments, including $25 billion in pre-arranged financing. This can support social safety nets for the most vulnerable people, boost fiscal capacity, and provide working capital and liquidity support for firms and farms. At the same time, the institution has made substantial progress on accelerating and simplifying its ability to mobilize private capital alongside its own financing and knowledge services. As a result, the World Bank Group is well positioned to invest in the next generation of youth in developing countries—most importantly, by improving the conditions for job creation.    The conflict is forcing adjustments in how the world produces and consumes energy. Global oil supply is projected to fall 5.2% in 2026—the largest drop in more than four decades outside the 2020 global recession. Meanwhile, consumption is expected to decline 2.5%, the third-largest annual contraction on record, after 2020 and 1980. High prices amid supply shortages are curbing demand, while electrification is also reducing oil use, particularly in China. Even so, production remains below consumption, forcing further withdrawals from oil stocks and leaving markets more exposed to renewed disruption.    Fertilizer prices are set to rise 14% in 2026, after a surge in urea prices early in the year that has since eased, before returning to 2025 levels in 2027.    Metals prices are set to reach a new high in 2026, rising 25% as prices of aluminum, copper, and tin all hit record highs. These gains reflect strong demand from investments in renewable energy, electric vehicles, and data centers, together with supply disruptions this year. Prices are expected to decline by 3% in 2027. Precious metals prices are forecast to increase by 40% in 2026 as demand for safe-haven assets remains elevated amid geopolitical and policy uncertainty. They are expected to moderate somewhat in 2027 but remain more than three times their 2015–19 average.   

The report’s special focus examines the interconnectedness of commodity markets, as in the degree to which variation in one commodity’s price can be explained by shocks to other commodity prices. It finds that links between commodity-price volatility become more pronounced during periods of economic or market stress, including since the start of the current conflict in the Middle East. Industrial metals transmit the most volatility to other commodity groups on average, although the role of oil prices rose markedly after the onset of the Middle East conflict.     Source: The World Bank Group