The ongoing conflict in the Middle East, following previous global shocks like COVID-19 and the Ukraine invasion, is expected to have major economic effects. According to the World Bank, worldwide commodity costs are forecast to climb 16% this year - the first annual uptick since 2022 - and are now roughly 25% above earlier January 2026 estimates.
The conflict has hit energy supplies hard. Meanwhile, LNG prices in Asia jumped 94% throughout March, and European natural gas rates rose 59%.
Brent crude is forecast by the World Bank to hit an average of $86 per barrel in 2026 and $70 per barrel in 2027. European natural gas costs are expected to rise roughly 25% in 2026, while U.S. natural gas prices are projected to climb 8% that year. The International Energy Agency released 400 million barrels from its emergency reserves to partly stabilize prices.
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The World Bank's index for fertilizer prices climbed over 12% during the first three months of 2026. It is predicted to rise more than 30% for the full year, fueled by increased input expenses - especially for nitrogen- and phosphate-based products - and steady demand. This increase is still much smaller than the dramatic surges seen in 2021 and 2022. Higher transport expenses from elevated oil prices, combined with reduced fertilizer usage, could cause domestic food prices to rise and heighten the risk of food shortages in vulnerable areas.
Prices for metals and minerals increased by 13% in Q1 2026, pushed up by growing worries about supply, particularly related to the Middle East conflict. The World Bank expects the metals and minerals price index to rise 17 percent in 2026 to a record high. Aluminum costs are forecast to rise roughly 22% in 2026. During the first quarter of 2026, precious metals are anticipated to jump 42% to all-time peaks, driven by geopolitical uncertainty and robust speculative and safe-haven buying.
Agricultural commodities are the sole category forecast to decline, dropping 6% in 2026. This is because a sharp 30% fall in beverage prices outweighs a slight 2% rise in food prices. The agricultural price index has been relatively steady for the last nine months, sitting about 7% lower in Q1 2026 compared to the same period a year ago.
The baseline forecast depends on ongoing supply interruptions in the Middle East, especially affecting energy and fertilizer markets. The forecast expects the worst supply disruptions tied to the conflict to conclude by the end of Q2 2026, with Middle Eastern oil exports rebounding after the height of the crisis and returning to near pre-war levels by year's end. Upside risks persist, especially if supply interruptions become more serious or last longer. Downside risks include faster adoption of electric vehicles, weaker global growth, and higher-than-expected supply - especially in 2027.
Agricultural commodity risks are also upward, as a longer or more severe conflict, severe weather events like a possible strong El Niño, or increased demand for biofuels could drive food prices above current forecasts.
For now, the revised forecast underscores how geopolitical instability can rapidly alter economic outlooks.
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