The World Bank issued a stark warning on Tuesday, projecting that the ongoing conflict in the Middle East will drive global energy costs to their highest levels since the 2022 invasion of Ukraine, while simultaneously triggering a sharp decline in fertilizer affordability.
According to the organization’s latest Commodity Markets Outlook, the global economy is facing “cumulative waves” of disruption.
The crisis escalated following February 28, after military strikes involving U.S. and Israeli forces targeted Iran, leading Tehran to virtually block the Strait of Hormuz—a chokepoint responsible for the transit of 20% of the world’s oil and liquefied natural gas.
”The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation,” said World Bank chief economist Indermit Gill.
Energy prices are expected to skyrocket by 24% this year. The agricultural sector is facing a parallel crisis, with fertilizer costs projected to jump by 31%, driven largely by a 60% surge in urea prices. This spike has pushed fertilizer affordability to its lowest point since 2022, threatening global crop yields and farmer livelihoods.
The report further noted that overall commodity costs are anticipated to spike by 16% in 2026. Beyond fuel and food, base metals like copper, aluminum, and tin are expected to hit record highs due to surging demand from data centers and the electric vehicle industry.
Despite oil prices retreating slightly from recent peaks, they remain significantly elevated compared to pre-war levels. Brent crude is currently 50% above its previous baseline, with forecasts suggesting an average of $86 per barrel for the year—a sharp rise from the $69 average seen in 2025.
Indermit Gill emphasized that the economic fallout will be felt most acutely by the world’s most vulnerable populations.
”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,” he said.