The World Bank has warned that a prolonged rise in oil prices caused by escalating conflict in the Middle East could worsen food insecurity across developing economies as higher energy and transport costs continue to affect global commodity markets.
In its latest Commodity Markets Outlook report, the institution projected global commodity prices to rise by 16 per cent in 2026, marking the first annual increase since 2022.
According to the report, the outlook reflects continued supply disruptions in the Middle East, particularly across energy and fertiliser markets, with risks remaining heavily tilted to the upside.
The report stated that Brent crude prices experienced extreme volatility during the first quarter of 2026 following disruptions to oil shipments through the Strait of Hormuz and attacks on regional energy infrastructure.
Brent crude reportedly rose from about $72 per barrel at the end of February to as high as $118 per barrel by the end of March, recording its largest monthly increase on record.
Although prices later eased following a ceasefire announcement, temporary sanctions relief for exports from Iran, Russia, and Venezuela, as well as emergency reserve releases by the International Energy Agency, crude prices still remained more than 50 per cent above their levels at the start of the year.
The World Bank projected Brent crude to average $86 per barrel in 2026, then moderate to $70 in 2027 if supply disruptions ease in the second quarter and exports gradually stabilise.
However, the institution warned that prolonged conflict or wider supply disruptions could push oil prices even higher, worsening inflation, food costs, and economic pressures across emerging markets.
According to the report, early estimates by the World Food Programme suggest that if oil prices remain above $100 per barrel for an extended period, up to 45 million additional people could face acute food insecurity globally.
The institution also noted that rising fuel prices are already increasing transportation and logistics costs, while higher fertiliser prices could further pressure agricultural production and food affordability.
The World Bank’s fertiliser price index rose by more than 12 per cent in the first quarter of 2026, reaching its highest level since 2022 due to disruptions in exports and shipping routes through the Strait of Hormuz, a critical route for fertiliser trade and energy supplies.
Prices of nitrogen- and phosphate-based fertilisers were particularly affected, with fertiliser prices projected to rise by more than 30 per cent this year.
Although agricultural commodity prices have remained relatively stable so far, the report warned that higher oil and fertiliser costs may eventually feed into domestic food inflation, especially in import-dependent economies.
The institution projected agricultural commodity prices to decline by six per cent in 2026 due mainly to falling prices of products such as cocoa and coffee. Still, it noted that rising production costs could continue to strain vulnerable households.
The report further warned that geopolitical tensions are adding pressure to an already fragile global economy recovering from the COVID-19 pandemic and the fallout from the Russian invasion of Ukraine.
Before the latest conflict escalation, emerging markets and developing economies were expected to grow by four per cent in 2026. However, the World Bank has now revised that forecast downward to 3.6 per cent, while projected inflation for those economies has been raised to 5.1 per cent from an earlier estimate of 4.1 per cent.
The report also projected metals and minerals prices to rise by 17 per cent this year, while precious metals including gold, platinum, and silver are expected to surge by 42 per cent amid heightened geopolitical uncertainty and increased safe-haven demand.
Meanwhile, natural gas markets have also tightened significantly, with the Asian LNG benchmark climbing 94 per cent during March and European gas prices rising 59 per cent due to intensified competition for cargoes following disruptions to Middle Eastern exports.
The World Bank warned that risks to the global commodity outlook remain skewed to the upside, especially if supply disruptions worsen or global shipping constraints persist.