World Bank Projects 24% Increase in Global Energy Prices by 2026 Due to Middle East Conflict

The forecast signals a potential economic downturn, particularly affecting inflation and food security globally.

• The World Bank projected a 24% surge in global energy prices for 2026 due to disruptions from the ongoing Middle East war.
• Brent crude oil prices are expected to average $86 per barrel, with risks pushing them as high as $115.
• Commodity prices overall are anticipated to rise by 16%, exacerbating inflation and food insecurity for millions.

• The Strait of Hormuz is critical, handling 35% of global seaborne crude oil trade, making it vulnerable to geopolitical tensions.
• The war has already caused a record oil supply shock, reducing global oil supply by 10 million barrels per day.
• Developing economies are projected to face inflation rates of 5.1%, pushing an additional 45 million people into food insecurity.

The World Bank's forecast, released on April 28, 2026, highlights a significant economic ripple effect stemming from the ongoing conflict in the Middle East. The war, particularly involving Iran, has led to targeted attacks on energy infrastructure and shipping routes, notably through the Strait of Hormuz. This strategic chokepoint is vital for global oil transport, and disruptions here have resulted in the largest oil supply shock on record, with a staggering reduction of 10 million barrels per day.

As a result, Brent crude oil prices have surged, with projections indicating an average of $86 per barrel in 2026, up from $69 in 2025. The World Bank's Chief Economist, Indermit Gill, emphasized that the ramifications of this energy price surge extend beyond just fuel costs. Higher energy prices typically lead to increased costs for food and other essential commodities, as transportation and production expenses rise. The forecast anticipates a 31% increase in fertilizer prices, which will further inflate food costs and exacerbate food insecurity, particularly in developing nations.

The broader economic implications are significant. The World Bank has revised its growth forecasts for the Gulf Cooperation Council (GCC) down to 1.3% for 2026, reflecting the adverse effects of energy turmoil. While residents in Dubai and other GCC nations may be shielded from direct energy price hikes due to government subsidies, they are not insulated from the indirect consequences, such as rising food prices and inflationary pressures.

The forecast also comes at a time when the U.S. Federal Reserve is grappling with inflation risks, leading to a decision to hold interest rates steady. This indicates a cautious approach to monetary policy amid rising commodity prices, which could further complicate economic recovery efforts.

In summary, the World Bank's projection is not just a statistic; it represents a complex interplay of geopolitical tensions, economic vulnerabilities, and the potential for widespread hardship, particularly for the most vulnerable populations.

• Consumers in developing economies: Facing higher food and energy costs, leading to increased financial strain.
• Agricultural sectors: Experiencing rising fertilizer prices, which could reduce crop yields and increase food prices.
• Investors in energy markets: Likely to see volatility in oil prices, impacting investment strategies and returns.
• Governments in the GCC: May need to adjust fiscal policies to manage inflation and support vulnerable populations.

• Oil price fluctuations: Monitoring Brent crude prices will be crucial as they directly impact global economic stability.
• Inflation rates in developing economies: Rising inflation could lead to social unrest and increased demand for government intervention.
• Food security indicators: Tracking food prices and availability will be essential to gauge the humanitarian impact of rising energy costs.