World Bank Projects 23% Increase in Commodity Prices by 2026
Written with artificial intelligence.
The World Bank forecasts a 23% rise in global commodity prices by 2026, driven by energy price surges and disruptions in maritime transport due to ongoing conflicts. A decrease in oil production may lead to the highest prices for various metals and agricultural products.
Commodity Price Forecast
According to the World Bank's latest report, global commodity prices are expected to rise by 23% by 2026. This increase is attributed to escalating energy costs, shipping disruptions from the war in the Middle East, and challenges in grain exports from the Black Sea. The demand for safe-haven assets like gold is also driving prices higher.
The report notes significant price hikes in oil, natural gas, food, and metals this year, influenced by global economic shocks. However, commodity prices are projected to decrease by 7% in 2025. Nonetheless, ongoing disruptions, particularly those related to El Niño's severe climate effects, could keep agricultural commodity prices elevated, posing risks for inflation and tighter monetary policies.
Vulnerabilities and Predictions
The global economy faces increasing vulnerability to supply shocks. The World Bank anticipates a 5.2% drop in global oil supply in 2026, marking the largest decline in 40 years, excluding the 2020 global recession. Ayhan Kose, the World Bank's Deputy Chief Economist, stated, "Commodity markets are being hit by several large shocks simultaneously," which threaten to worsen inflation and food insecurity.
In its biannual report, released just before a meeting of the G20 foreign ministers in Atlanta, the World Bank emphasized its commitment to support the world's poorest populations, having already provided $8.7 billion in low-interest loans and assistance to 25 countries affected by the Middle East conflict.
Specific Price Expectations
The report highlights that energy prices are projected to rise by 32% in 2026, reaching levels not seen since Russia's invasion of Ukraine in 2022. Oil prices are expected to average $92 per barrel in 2026, influenced by a 2.5% anticipated drop in demand this year. Agricultural commodity prices may increase by over 10% in 2026 due to ongoing supply chain issues.
Furthermore, should adverse conditions persist, including a record El Niño and intensified Middle Eastern conflicts, food prices could rise an additional 12%. This scenario could lead to a food crisis reminiscent of the early 2010s, which pushed over 40 million people into extreme poverty.
Fertilizer prices are expected to rise by 14% in 2026, while metal prices may increase by 25%, driven by strong demand and supply disruptions. Precious metal prices could soar by 40%, driven by geopolitical uncertainties and economic policy concerns. However, a moderation in these prices is anticipated in 2027.