Global shocks to drive 23 pc increase in commodity prices in 2026: World Bank report

• Energy prices to rise 32 pc, food commodity prices to climb 18 pc in 2026–27

WASHINGTON: Commodity prices are forecast to rise 23% in 2026, according to the World Bank Group’s latest Commodity Markets Outlook released on October 28. Escalating global shocks are driving up costs across energy, food and metals markets.

The report says the conflict in the Middle East has reduced oil inventories and is set to push energy prices to a four-year high, while disrupted grain shipments and El Niño threaten harvests and food affordability. With oil stocks depleted, the global economy faces greater exposure to further supply shocks.

Energy prices are forecast to increase 32% in 2026, reversing three consecutive years of declines, before easing in 2027. Brent crude is expected to average $91 a barrel in 2026, up from $69 in 2025, before falling to $79 in 2027.

Food commodity prices are projected to rise about 10% in 2026 and a further 7% in 2027, resulting in a cumulative increase of 18% over the two years. The report attributes the increase to disruptions in grain shipments, El Niño-related threats to harvests and higher fuel and fertiliser costs.

“Commodity markets are being hit by several major shocks at once,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group. “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 priority must be to protect the poorest people and support low-income countries already struggling with heavy debt burdens.”

The projections assume no major escalation of conflicts affecting global commodity supplies. However, the World Bank Group warns that a worsening conflict in the Middle East, continued damage to Russia’s oil infrastructure, attacks on Black Sea grain shipments and a stronger-than-expected El Niño could intensify energy and food price pressures.

In a downside scenario where these risks occur simultaneously, Brent crude could average $105 a barrel in 2027, while food commodity prices could rise 12% above the baseline forecast, exceeding their 2022 levels.

To help countries manage the effects of rising prices, the World Bank Group said it has made $50 billion to $60 billion available through existing instruments, including $25 billion in pre-arranged financing. The support can help strengthen social safety nets, increase fiscal capacity and provide liquidity support for firms and farms.

The report says global oil supply is expected to decline 5.2% in 2026, marking the largest drop in more than four decades outside the 2020 global recession. Oil consumption is projected to fall 2.5%, the third-largest annual decrease on record after 2020 and 1980.

Fertiliser prices are forecast to increase 14% in 2026 before returning to 2025 levels in 2027. Metals prices are expected to rise 25% in 2026, with aluminium, copper and tin reaching record highs amid strong demand linked to renewable energy, electric vehicles and data centres, as well as supply disruptions.

Precious metals prices are projected to jump 40% in 2026 as demand for safe-haven assets remains elevated amid geopolitical and policy uncertainty.

The report’s special analysis found that links between commodity-price volatility become stronger during periods of economic or market stress, including since the start of the current conflict in the Middle East. It noted that industrial metals transmit the most volatility across commodity groups on average, while the influence of oil prices has increased significantly since the conflict began.