Subscribe
The World Bank on April 28, 2026, warned that the US-Israel war with Iran is set to trigger the largest global energy price surge since Russia’s 2022 invasion of Ukraine, even as the United Arab Emirates (UAE) exited the OPEC and OPEC+ on the same day, dealing a heavy blow to both oil exporting groups.
The war, which began after the US and Israel launched attacks on Iran in the wee hours of February 28, 2026, will pushing commodity prices sharply higher, stoking inflation and slowing growth across developing economies, according to the World Bank Group’s latest Commodity Markets Outlook.
The multilateral development bank forecast energy prices to jump 24 per cent in 2026, while overall commodity prices are expected to rise 16 per cent, driven by soaring fuel and fertiliser costs and record-high prices for several industrial and precious metals.
The report said the shock would have serious consequences for jobs, poverty reduction and development prospects worldwide.
The UAE’s move, meanwhile, came after the Gulf nation criticised fellow Arab states for not doing enough to protect it from numerous Iranian attacks during the war.
OPEC Gulf producers have already been struggling to ship exports through the Strait of Hormuz, a narrow chokepoint between Iran and Oman through which a fifth of the world’s crude oil and liquefied natural gas normally passes, because of Iranian threats and attacks against vessels.
United States President Donald Trump has accused OPEC of “ripping off the rest of the world” by inflating oil prices.
Trump has also linked US military support for the Gulf with oil prices, saying that while the US defends OPEC members, they “exploit this by imposing high oil prices”.
Attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz — a critical chokepoint where 35 per cent of global seaborne crude oil trade passes through — have caused what the World Bank described as the largest oil supply shock on record.
Global oil supply initially fell by around 10 million barrels per day, while Brent crude prices in mid-April were more than 50 per cent higher than at the start of the year.
Brent is now forecast to average $86 a barrel in 2026, up sharply from $69 a barrel in 2025. The forecast assumes the most severe disruptions ease in May and shipping flows through Hormuz gradually return to pre-war levels by late 2026.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, chief economist and senior vice president for development economics at the World Bank Group.
“The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest, as will developing economies already struggling under heavy debt burdens. All of this is a reminder of a stark truth: war is development in reverse,” Gill added.
Fertiliser prices are projected to rise 31 per cent in 2026, led by a 60 per cent surge in urea prices. The World Bank said fertiliser affordability could deteriorate to its worst level since 2022, squeezing farmers’ incomes and threatening future crop yields.
If the conflict lasts longer than expected, the resulting pressure on food supply and affordability could push up to 45 million more people into acute food insecurity this year, the Bank said, citing estimates from the World Food Programme.
Prices for base metals such as aluminium, copper and tin are expected to hit all-time highs, driven by demand from expanding data centres, electric vehicles and renewable energy industries.
Precious metals are also rallying amid geopolitical uncertainty, with average prices forecast to rise 42 per cent in 2026 as investors seek safe-haven assets.
The World Bank said rising commodity prices would lift inflation and weaken growth globally.
Inflation in developing economies is now projected to average 5.1 per cent in 2026, a full 1 percentage point higher than expected before the war and above 4.7 per cent last year.
Growth across developing economies is forecast at 3.6 per cent in 2026, a 0.4 percentage point downgrade from January estimates.
Countries directly affected by conflict are expected to suffer the most. The report added that 70 per cent of commodity importers and more than 60 per cent of commodity exporters worldwide could post weaker growth than previously projected.
If hostilities intensify or supply disruptions persist longer than expected, Brent crude could average as high as $115 a barrel in 2026, the bank said.
That scenario would likely push inflation in developing economies to 5.8 per cent, a level exceeded only once in the past decade, during the 2022 energy crisis.
Higher oil prices would also spill over into fertiliser and alternative fuels such as biofuels.
“The succession of shocks over the decade has sharply reduced the fiscal space available to respond to the current historic energy supply crisis,” said Ayhan Kose, deputy chief economist and director of the Prospects Group at the World Bank.
“Governments must resist the temptation of broad, untargeted fiscal support measures that could distort markets and erode fiscal buffers. Instead, they should focus on rapid, temporary support targeted to the most vulnerable households,” Kose said.
The report’s special analysis found oil-price volatility during periods of rising geopolitical risk is roughly twice as high as during calmer periods.
A geopolitically driven 1 per cent decline in oil production typically raises prices by 11.5 per cent, while spillover effects on other commodities are around 50 per cent larger than under normal conditions.
According to the World Bank, a 10 per cent oil price increase caused by geopolitical supply shocks can lead to natural gas prices rising 7 per cent and fertiliser prices climbing more than 5 per cent, with peak effects usually emerging about a year later.
The bank warned that these delayed shocks could further undermine food security and poverty reduction efforts worldwide.