The World Bank has warned that a prolonged surge in oil prices triggered by escalating conflict in the Middle East could worsen food insecurity across developing economies, as higher energy and transport costs ripple through global commodity markets.

In its latest Commodity Markets Outlook, the lender noted global commodity prices are projected to rise by 16 per cent in 2026, marking the first annual increase since 2022. The institution said the outlook reflects continued supply disruptions in the Middle East, particularly across energy and fertiliser markets, with risks remaining heavily tilted to the upside.

The report said Brent crude prices experienced unprecedented volatility during the first quarter of 2026, driven by disruptions to oil shipments through the Strait of Hormuz and attacks on regional energy infrastructure.

Brent rose from about $72 a barrel at the end of February to as high as $118 a barrel by the end of March, recording the largest monthly increase on record.

Prices later eased following a ceasefire announcement and temporary sanctions relief for exports from Iran, Russia and Venezuela, alongside the release of emergency reserves by the International Energy Agency.

Despite the pullback, crude prices remained more than 50 per cent above their levels at the start of the year.

The World Bank said Brent is expected to average $86 a barrel in 2026 before easing to $70 in 2027, assuming the most severe phase of supply disruptions subsides during the second quarter and exports gradually stabilise.

However, it warned that a more prolonged conflict or wider supply disruptions could push prices significantly higher, with direct implications for inflation, food costs and economic growth across emerging markets.

“Early estimates by the World Food Programme suggest that if oil prices remain above $100 per barrel for an extended period, up to 45 million additional people could face acute food insecurity,” the report said.

The institution added that higher fuel prices are already increasing transport and logistics costs, while rising fertiliser prices could further pressure agricultural production and food affordability.

The World Bank’s fertiliser price index rose more than 12 per cent in the first quarter of 2026, reaching its highest monthly level since 2022. The increase was largely linked to disruptions in exports and shipping routes through the Strait of Hormuz, a critical corridor for fertiliser trade and energy supplies.

Prices for nitrogen- and phosphate-based fertilisers were particularly affected, with the World Bank projecting fertiliser prices to rise by more than 30 per cent this year.

Although the World Bank stated that agricultural commodity prices have remained broadly stable so far, it cautioned that the impact of higher oil and fertiliser costs may still feed into domestic food inflation, especially in import-dependent economies.

The institution projected agricultural commodity prices to decline by six per cent in 2026, largely due to falling beverage prices for products such as cocoa and coffee. Still, modest increases in food prices and rising input costs are expected to keep pressure on vulnerable households.

The report also warned that geopolitical tensions are adding to an already fragile global economic environment following the COVID-19 pandemic and the fallout from Russia’s invasion of Ukraine.

Before the latest conflict, emerging markets and developing economies were expected to grow by four per cent in 2026. The World Bank has since revised that forecast down to 3.6 per cent, while projected inflation for those economies has been raised to 5.1 per cent from an earlier estimate of 4.1 per cent.

Beyond energy, the report said metals, minerals and precious metals prices are also rising sharply due to supply concerns and strong demand. The World Bank expects metals and minerals prices to rise 17 per cent this year, while precious metals prices, including gold, platinum and silver, are projected to surge 42 per cent to record highs amid heightened geopolitical uncertainty and safe haven demand.

Natural gas markets have also tightened significantly. The Asian LNG benchmark climbed 94 per cent during March, while European gas prices rose 59 per cent, reflecting intensified competition for cargoes following disruptions to Middle Eastern exports.

The World Bank said risks to the commodity outlook remain skewed to the upside, particularly if supply disruptions intensify or global shipping constraints persist. It added that extreme weather events and stronger biofuel demand could further increase food prices in the months ahead.