The Middle East war has triggered the biggest global energy supply shock on record and will drive a sharp rise in commodity prices, pushing inflation higher and slowing economic growth worldwide, the World Bank has warned.
Attacks on energy infrastructure and shipping in the critical Strait of Hormuz have cut global supply by about 10 million barrels per day in the early stage of the US‑Israeli war on Iran, according to the bank’s Commodity Markets Outlook released on Wednesday.
Energy prices are set to jump by 24% this year to their highest level since 2022, while overall commodity costs will rise by 16%, the World Bank said, adding that the war has triggered “the biggest energy supply shock in history.”
Prices could climb further if the conflict intensifies, with oil potentially averaging $115 per barrel this year under the bank’s more severe disruption scenario.
Natural gas prices are also forecast to rise, with the EU particularly exposed to supply disruptions and higher import costs. Regional natural gas futures have surged in recent weeks.
The shock will ripple far beyond oil and gas, according to the report. Fertilizer prices are projected to climb by 31% this year, driven by a 60% surge in urea, raising concerns over agricultural output and food affordability. Prices for metals such as aluminum, copper and tin are also expected to hit record highs.
“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,” said World Bank Chief Economist Indermit Gill.
Brent crude briefly topped $117 per barrel on Wednesday, its highest level since March, amid supply concerns and after the UAE announced plans to exit OPEC, adding further uncertainty to global oil markets.
“The current situation is likely to keep inflation elevated globally, especially as disruptions in oil and commodity markets persist,” Iranian economist Peyman Molavi told RT, warning that uncertainty around Hormuz remains a key risk for further price increases.
He added that the UAE’s decision could increase market volatility by giving producers more freedom over pricing and output.
Talks between Washington and Tehran remain stalled, with US President Donald Trump reportedly rejecting an Iranian proposal to reopen the Strait of Hormuz and lift the naval blockade while postponing nuclear negotiations to a later stage.