World Bank Warns of Sharpest Energy Price Surge since 2022

The World Bank warned that recent geopolitical developments in the Middle East could trigger the most significant surge in global energy prices since the 2022 Russia-Ukraine war, with oil, gas, and related commodities expected to see steep increases throughout the year.

According to projections shared by Ayhan Kose, the World Bank’s Deputy Chief Economist, global energy prices are forecast to rise by around 24% this year, driven by tightening supply conditions and heightened market volatility.

Speaking on the “Talking Development” program, Kose said that Brent crude oil prices could average around $86 per barrel in 2026, a substantial upward revision from earlier estimates of $60 per barrel, marking an increase of nearly 50% compared to previous forecasts.

He added that crude prices have already exceeded $130 per barrel in recent trading periods, reflecting the sensitivity of energy markets to geopolitical instability and supply disruption risks.

The World Bank noted that energy markets remain the most immediately affected by ongoing geopolitical tensions, with rising oil and gas prices feeding directly into higher inflation rates and increased transportation and production costs worldwide. The impact is particularly severe in developing economies, where fiscal constraints and limited shock-absorbing capacity leave countries more exposed to external price volatility.

The report further emphasized that the crisis is not confined to energy markets alone, as rising costs are also spreading across food commodities, fertilizers, and industrial metals, amplifying pressure on already fragile global supply chains.

Fertilizer prices, in particular, have seen a sharp upward trajectory, with the World Bank projecting increases of more than 30% compared to last year. Urea prices are expected to rise by as much as 60% over the course of the year, adding further strain to global agricultural production systems.

The institution warned that higher fertilizer costs are likely to directly affect farmers’ purchasing power, potentially reducing agricultural output in the current and upcoming growing seasons. This, in turn, could contribute to higher food prices and deepen concerns over global food security at a time when many low-income countries are already facing heightened vulnerability.

Economists at the World Bank cautioned that prolonged price pressures across energy and agricultural inputs could exacerbate poverty levels and widen inequality, particularly in economies with limited fiscal space to implement effective mitigation measures.

The report highlights growing concerns that interconnected commodity shocks could reignite inflationary pressures worldwide, complicate monetary policy decisions, and slow global economic recovery in the coming months.