World Bank warns largest energy shock

The World Bank said on April 28 that the war in the Middle East could deliver the biggest energy-price shock since Russia’s 2022 invasion of Ukraine. (worldbank.org) In the bank’s baseline case, energy prices rise 24% in 2026 and reach their highest level since 2022. Overall commodity prices are forecast to climb 16% this year. (worldbank.org) The forecast assumes the most acute supply disruptions from the war end in May. Even then, the bank said shipping through the Strait of Hormuz would only gradually return to near prewar levels by October. (worldbank.org) Oil is the center of the warning because the Strait of Hormuz handles a large share of the world’s seaborne crude and liquefied natural gas. When tankers are delayed or blocked there, fuel costs ripple into freight, food and factory prices. (worldbank.org) (imf.org) The World Bank said Brent crude is projected to average $86 a barrel in 2026, up from $69 in 2025. In a worse disruption scenario, it said prices could climb to about $115 a barrel. (worldbank.org) Natural gas and coal are moving higher too. The bank said fertilizer prices are also expected to rise, a warning sign for food-importing countries that were already exposed to higher shipping and energy bills. (worldbank.org) The International Monetary Fund had already cut its 2026 global growth forecast to 3.1% in its April 14 World Economic Outlook. It said rising commodity prices, firmer inflation expectations and tighter financial conditions were testing the world economy’s resilience. (imf.org) The fund’s forecast assumes a limited conflict, not a deeper regional shutdown. That leaves the World Bank’s warning looking less like a stand-alone commodities call and more like a risk to the IMF’s base case for growth and disinflation. (imf.org) (worldbank.org) The heaviest burden is likely to fall on poorer energy importers. They have less room to subsidize fuel, defend currencies or absorb higher food and transport costs when oil and gas prices jump at the same time. (imf.org) (weforum.org) For now, the World Bank is not forecasting a repeat of the 1970s oil shocks. It is saying that even a partial normalization of shipping would still leave 2026 facing the sharpest energy-price surge in four years. (worldbank.org)