Washington:The World Bank has projected a notable 32 percent increase in global energy prices this year. This surge is accompanied by a 23 percent rise in overall global commodity prices, fueled by escalating energy costs, disruptions in cargo shipping due to the ongoing Middle East conflict, and grain shipment interruptions across the Black Sea.
According to Qatar News Agency, the Bank’s report on commodity market prospects highlighted that prices for oil, natural gas, food, and metals have sharply increased this year amid intensifying global crises. The report warned that these pressures might escalate further if the Middle East conflict worsens and if there is continued damage to Russian oil infrastructure.
The World Bank forecasts a 7 percent decline in commodity prices next year. However, ongoing shocks, including the anticipated strong impact of the El Niño weather phenomenon, could keep food prices high, potentially leading to rising inflation and tighter monetary policies. The report also emphasized the global economy’s vulnerability to future supply shocks, predicting a significant 5.2 percent contraction in global oil supply by 2026, marking the largest decline in four decades outside the 2020 global recession.
In response to these challenges, the Bank has provided concessional loans and financial assistance totaling USD 8.7 billion to 25 countries affected by the Middle East conflict. This includes 10 nations that redirected existing programs to manage crisis-related expenses, 19 nations tapping into new resources, and some utilizing both pathways.
With declining oil production, the Bank expects Brent crude prices to remain high in the near term, averaging USD 92 per barrel this year. It noted that prices would have been even higher if not for an anticipated 2.5 percent drop in global oil demand, the third-largest decline of its kind after those during the COVID-19 pandemic shock in 2020 and the 1980 oil crisis.
Furthermore, food commodity prices are projected to rise by slightly over 10 percent in 2026 due to grain shipping disruptions from the Russia-Ukraine conflict in the Black Sea region. A further increase of more than 7 percent is expected in 2027, culminating in an approximate 18 percent growth.
The World Bank cautioned that food prices could climb 12 percent above baseline projections under a downside scenario involving peak El Niño intensity, compounded Black Sea grain shipping disruptions, an escalation of the Middle East conflict, and ongoing damage to Russian oil infrastructure. Such factors could potentially trigger a global food crisis similar to the early 2010s, which pushed over 40 million additional people into extreme poverty.