Executive summary

The Middle East conflict has delivered a historic shock to energy supplies, occurring alongside hostilities in Ukraine and a powerful El Niño event. Overall commodity prices are projected to rise by 23 per cent in 2026, marking the second-highest level since 2013. This surge is primarily led by a 32 per cent jump in energy prices. While global oil production is expected to drop by more than 5 per cent in 2026, Brent crude prices are forecast to average $91 per barrel. Food commodity prices are on track to increase by 10 per cent in 2026, while metals and minerals are projected to reach an all-time high. By 2027, prices are expected to decline by 7 per cent as oil production recovers and El Niño impacts become manageable, although projections have been revised upwards significantly since earlier in the year.

The state of commodity markets

The outlook for commodity markets is increasingly complex due to reinforcing shocks. Crude oil exports from the Gulf have remained close to pre-conflict volumes through workarounds such as ship-to-ship transfers, but refined product flows have been halved due to refinery damage. Attacks on infrastructure, such as Saudi Arabia’s East-West Pipeline and threats in the Red Sea, highlight the vulnerability of alternative routes. Global oil inventories were drawn down at an average rate of 2.4 million barrels per day between March and September 2026 to buffer production deficits. Demand has responded to higher prices, with global consumption declining in the second and third quarters of 2026.

Outlook

The baseline forecast assumes no major intensification of Middle East hostilities and a return to normal for Russian oil export capacity in 2027. Global economic growth is expected to remain moderate, though investment in data centres and renewables will sustain robust demand for metals. Under these conditions, the World Bank Group’s commodity price index is expected to reach near-record levels before a modest retreat in 2027.

Energy

Energy prices are set to increase by 32 per cent in 2026 before a projected 12 per cent retreat in 2027. Brent oil is expected to average nearly $100 per barrel in the final quarter of 2026 as the market remains in deficit. Despite a tepid recovery in oil consumption due to the shift towards electric vehicles (EVs), supply constraints dominate the near-term outlook. European natural gas prices are projected to surge by 58 per cent in 2026 to $19 per million British thermal units (mmBtu), reflecting tight global LNG markets and damage to infrastructure in Qatar. Coal prices are also on course to climb by 25 per cent in 2026 due to stronger demand and supply constraints.

Agriculture and fertilizers

Food commodity prices are expected to rise by 10 per cent in 2026. This reflects the impact of a very strong El Niño on tropical commodities and the disruption of Black Sea grain exports. In 2027, food prices are forecast to climb a further 7 per cent, led by a 9 per cent rise in grain prices. While global grain supplies for 2026–27 are expected to be the second-largest on record, production in the United States and the European Union faces headwinds from drought and extreme heat. Agricultural raw materials, such as cotton and rubber, are also seeing price increases due to adverse weather conditions. Fertilizer prices are anticipated to rise by 14 per cent in 2026, driven by a surge in urea prices, though they are expected to revert to 2025 levels by 2027 as energy costs decline.

Metals and minerals

The metals and minerals price index is projected to reach a new high in 2026, rising by 25 per cent. Base metals such as copper, aluminium, and tin are on track for large gains due to supply constraints and growing investment in the energy transition. Precious metal prices are also expected to increase by 40 per cent in 2026, with gold and silver potentially setting annual records amid geopolitical uncertainty. Prices are expected to moderate slightly in 2027 as interest rates soften investment flows into non-yielding assets.

Risks

Risks to the outlook are tilted towards higher prices. The greatest threat is an intensification of Middle East hostilities that could sharply curb oil exports. In an adverse scenario, Brent oil could average $105 per barrel in 2027, and food prices could exceed their 2022 levels, worsening global food insecurity. Conversely, a durable settlement in the Middle East could cause energy prices to plunge. Additional risks include stronger-than-expected El Niño effects, further trade restrictions, and potential disruptions to strategic transport routes like the Strait of Hormuz.

Broader implications

The trajectory of commodity prices has significant consequences for global inflation and monetary policy. Tighter policy from G7 central banks may be necessary if energy-driven inflation persists, potentially encouraging capital outflows from emerging market and developing economies (EMDEs). Severe food insecurity remains elevated, affecting 9.5 per cent of the global population in 2025. The World Bank Group has responded to the Middle East conflict by making $50 billion to $60 billion available through existing instruments to support social safety nets and provide liquidity. Furthermore, the group is targeting a fivefold increase in financing for the metals and minerals sector to $19 billion by 2030 to support long-term resilience in EMDEs.