World Bank sees commodity prices up 23% in 2026 due to Middle East war, other shocks

By Andrea Shalal

WASHINGTON, Oct 28 (Reuters) - Global commodity prices are set to surge 23% in 2026, the World Bank said on Wednesday, citing rising energy prices and disruptions to cargo shipping during the Middle East war, grain shipment problems in the Black Sea and high demand for safe-haven assets such as gold.

Oil, natural gas, food and metals prices all rose sharply this year as global shocks mounted, the World Bank said in its latest Commodity Markets Outlook. It said the situation could worsen if the conflict in the Middle East ratcheted up and damage to Russian oil infrastructure continued.

Commodity prices were expected to ease by 7% next year, it said, but continued shocks - including forecasts for the worst El Niño weather effect since 1950 - could keep food commodity prices elevated, raising the specter of higher inflation and tighter monetary policy.

The global economy was more vulnerable to future supply shocks at the moment. Global oil stocks have been depleted during the war in the Middle East, and global oil supply is expected to drop 5.2% in 2026, the biggest drop in four decades outside the 2020 global recession, the bank said.

"Commodity markets are being hit by several major shocks at once," said Ayhan Kose, the World Bank’s deputy chief economist. "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 bank released its twice-yearly report on Wednesday, two days before foreign ministers from the world's 20 largest economies are due to gather in Atlanta, Georgia for a meeting that will focus on the wars in the Middle East and Ukraine.

Kose said the World Bank was focused on protecting the world's poorest people and supporting low-income countries already grappling with heavy debt burdens.

The bank had already provided $8.7 billion in low-cost loans and other aid to 25 countries affected negatively by the war in the Middle East, the report said. This included 10 countries that retooled existing programs to cover crisis-related expenses, and 19 that had tapped new resources, with some using both.

The report, released twice a year, said global energy prices surged 32% in 2026, reaching their highest level since 2022's invasion of Ukraine by Russia.

With oil output down, Brent oil prices were expected to remain elevated in the near term, averaging $92 per barrel for the year. Prices would be even higher if oil demand were not forecast to drop 2.5% this year, the third-largest drop behind the 2020 COVID shock and the 1980 oil crisis.

It said food commodity prices were set to rise just over 10% in 2026 due to grain shipment disruptions caused by hostilities between Russia and Ukraine in the Black Sea, and another 7%-plus in 2027, for a cumulative increase of nearly 18%.

An adverse scenario that coupled a record El Nino, more Black Sea grain shipment disruptions, escalation in the Middle East conflict and ongoing damage to Russian oil infrastructure could drive food prices 12% higher than expected, it said. That could trigger a food crisis like the one seen in the early 2010s, when more than 40 million additional people were pushed into extreme poverty, the bank noted.

Fertilizer prices were expected to rise 14% in 2026, due to a surge in urea prices, returning to 2025 levels in 2027.

Metals prices were projected to rise 25% and hit a new high in 2026, with aluminum, copper and tin all setting new records as a result of supply disruptions and strong demand from investments in renewable energy, electric vehicles and data centers, the bank said.

Precious metals prices were projected to surge by 40% in 2026, amid elevated demand for safe-haven assets triggered by geopolitical and policy uncertainty, with some moderation seen in 2027.

(Reporting by Andrea Shalal; Editing by David Gregorio)