World Bank sees 24% energy spike

Energy prices sit underneath almost everything — transport, food, fertilizer, factory costs, household bills. So when the World Bank says they could jump 24% in 2026, that is not just an oil-market story. It is an inflation story, a growth story, and for poorer importing countries, a balance-of-payments story. The new trigger is the war in the Middle East, which the Bank now sees as a severe enough shock to push energy prices to their highest average level since the 2022 surge after Russia’s invasion of Ukraine. (worldbank.org) ### What actually changed? The change is the forecast. On April 28, the World Bank released its latest Commodity Markets Outlook and sharply raised its view of 2026 energy prices. It now expects energy as a group — oil, natural gas, and coal — to average 24% higher this year. It also expects overall commodity prices to rise 16%, which would mark the first annual increase since 2022. (worldbank.org) That is a big swing because, not long ago, the broader expectation was for softer commodity prices. The Bank’s October 2024 outlook had argued that an oil glut could blunt the effect of wider Middle East conflict. That cushion is no longer doing the same work. (worldbank.org) shock? Because this is not just about one producer losing barrels. The report describes attacks on energy infrastructure and a near cessation of shipping through the Strait of Hormuz — one of the world’s critical chokepoints for oil and gas trade. When that pas(worldbank.org)fuels at once. (openknowledge.worldbank.org) Basically, it is like pinching the main artery of the energy system. Even if some supply still exists, getting it to buyers becomes slower, riskier, and more expensive. (openknowledge.worldbank.org)lt on permanent paralysis. It assumes the most acute phase of trade disruption ends relatively soon and shipping volumes gradually recover to near prewar levels by October. So the 24% spike is the “disruptions ease” case, not the extreme tail risk. (documents.worldbank.org) That means the forecast carries a clear asymmetry. If conditions improve faster, the damage could be smaller. But if shipping or infrastructure problems last longer, prices could overshoot even this new baseline. That last part is an inference from the Bank’s recovery assumptions and its description of the shock. (openknowledge.worldbank.org) ### Who gets hit first? Energy importers with thin fiscal room. Poorer countries feel this fastest because they do not just buy fuel — they also absorb the second-round hit through food and fertilizer. The World Bank flags soaring fertilizer prices alongside energy and record highs for some metals, which is a bad mix for countries already dealing with fragile inflation and debt dynamics. (worldbank.org) Sub-Saharan Africa is a good example of the broader pressure. The IMF said in April that regional growth is expected to slow to 4.3% in 2026 from 4.5% in 2025, with the Middle East war pushing up commodity and shipping costs. (imf.org)ay inside the energy sector. Natural gas is a major input for fertilizer, so higher gas prices can feed into higher farming costs, then food prices, then household budgets. That is why a commodity shock can keep showing up months later in headline inflation. (worldbank.org) ### So what is the bottom line? The World Bank is saying the global economy just lost one of its hoped-for relief valves. Instead of cheaper commodities helping growth in 2026, war-driven supply and shipping disruptions are pushing energy and input costs back up. If the disruption fades by October, the world still gets a painful year. If it does not, this forecast may end up looking conservative. (worldbank.org)