Energy Prices Set to Jump 32% This Year in World Bank Outlook

The World Bank increased its price forecasts for commodities, citing disruptions to energy supplies from the Middle East war and the threat to harvests from El Niño.

Energy prices are projected to climb 32% in 2026, reversing three years of declines, before easing next year, the Washington-based bank said in a report published Wednesday. It forecast that oil will average $91 a barrel this year, while global supply is seen falling by 5.2% — the biggest decline in more than four decades excluding the pandemic year of 2020.

There’s also mounting pressure on natural gas prices in economies that depend on imports of the fuel, the World Bank said. As for El Niño, agricultural producers are “bracing for pockets of flooding, drought, and heat stress across multiple regions.” The bank foresees a cumulative increase of 18% in food prices across this year and next.

“Commodity markets are being hit by several major shocks at once,” said Ayhan Kose, the bank’s deputy chief economist. “Higher energy costs and trade disruptions are driving up prices across a broad range of commodities, threatening to worsen inflation, food insecurity, and economic growth.”

There’s been an effect on demand too. Global oil consumption is projected to contract by 2.5% this year, the third-largest annual decline on record, as high prices curb use. Consumption is expected to pickup only slightly next year. Adoption of electric vehicles, particularly in China, is among the reasons for that.

The bank said metals prices are on track to rise 25% in 2026 as the costs of aluminum, copper and tin hit record highs. That not only reflects supply constraints but also resilient demand. “Rapidly growing investment in power grids, electric vehicle (EV) production, renewable energy, electronics, and data centers continued to support demand for aluminum, copper, and tin.”

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