World Bank Warns Middle East Crisis Deepens Strain on Poor, Developing Economies

The World Bank issued a stark warning over the widening economic fallout from the escalating conflict in the Middle East, cautioning that rising energy and commodity prices could significantly worsen conditions for the world’s poorest populations and developing nations.

In its latest Commodity Markets Outlook report, the World Bank projected that oil prices could climb to around $115 per barrel, intensifying global inflationary pressures and exacerbating food insecurity. The report estimates that up to 45 million additional people could fall into acute food insecurity during the current year if current trends persist.

The institution described current global commodity markets as experiencing one of the most severe shocks in modern history, driven by disruptions to energy supplies and international trade flows following the outbreak of regional conflict.

According to the report, global oil supply dropped sharply by approximately 10 million barrels per day in March, an unprecedented disruption in oil markets. As a result, Brent crude prices surged from about $72 per barrel in February to $118 by the end of March, before easing slightly but remaining roughly 50% higher than at the start of the year.

Natural gas markets have also come under intense pressure. Liquefied natural gas prices in Asia jumped by 94% during March, while Europe saw a 59% increase, reflecting fierce global competition for limited supplies amid declining exports from crisis-hit regions.

Overall, the World Bank expects global commodity prices to rise by 16% in 2026, marking the first annual increase since 2022, largely driven by a projected 24% surge in energy costs.

Food prices, while expected to increase modestly by around 2%, are being heavily influenced by rising vegetable oil costs linked to biofuel production. Meanwhile, fertilizer markets have seen sharp increases of 31%, particularly in urea prices, due to supply disruptions and higher natural gas costs.

Indermit Gill, the World Bank’s chief economist, emphasized that the burden will fall disproportionately on vulnerable populations. “The greatest damage will be borne by the poor, for whom food and fuel consume the largest share of income, as well as by developing economies already weighed down by debt,” he said.

The report also warned that further escalation in regional tensions could lead to additional disruptions in the production and transportation of key commodities, particularly oil and gas. Critical shipping routes such as the Strait of Hormuz may remain constrained until at least the second quarter of 2026 or beyond, depending on security and logistical challenges.

Prolonged restrictions on Gulf shipping routes could delay a full recovery in export levels until late 2026 or even early 2027, the report noted. In more severe scenarios, additional damage to oil infrastructure could reduce global production capacity by up to 4% compared to pre-conflict expectations.

Despite these risks, the World Bank pointed to mitigating factors, including previously ample global oil supplies, the potential use of strategic reserves, floating storage, and alternative export routes, which may help cushion short-term disruptions. However, it warned that prolonged crisis could deplete global stockpiles and strain alternative supply channels, including pipelines.

The report forecasts that prices for base metals may reach record highs in 2026, driven by strong industrial demand and tightening supply, while precious metals are expected to remain elevated amid ongoing geopolitical uncertainty.