Energy more expensive by a quarter? The World Bank on the effects of the conflict with Iran

The World Bank said on Tuesday that it estimates that energy prices will jump 24% this year due to the war with Iran, assuming that the most serious supply disruptions end in May. If the conflict in the region escalates, the increase in commodity prices may be even higher.

In the latest report on the commodity market (Commodity Markets Outlook), the World Bank explains that its forecasts are based on the assumption that the most serious problems with the transport of raw materials through the Strait of Hormuz will end by October. The institution emphasized that trends definitely point to price increases.

Overall, due to the increase in prices of energy, fertilizers and many important metals, commodity prices are expected to increase by 16% in 2026.

The World Bank recalled that disruptions in transport through the Strait of Hormuz and attacks on gas and oil installations led to the largest problem in the supply of energy raw materials in history.

Oil for $115? A wave of energy and food increases is coming

The price of Brent crude oil, considered a reference point for the prices of other types of raw material, remained 50% lower in mid-April. higher than at the beginning of the year. The bank forecasts that the average price of a barrel of Brent will be $86 in 2026. (in 2025 it was USD 69), but it may reach up to USD 115 if oil installations suffer as a result of hostilities and the export of raw materials does not quickly return to normal levels.

“War hits the global economy in overlapping waves: first through high energy prices, then high food prices, and finally through high inflation, which will push up interest rates and increase borrowing costs,” said World Bank Chief Economist Indermit Gill.

Dramatic forecasts of the World Bank regarding war with Iran

Pressure on food prices will increase as the Bank estimates that fertilizer prices will jump by 31% this year.

According to the World Food Program, 45 million people could be at risk of food shortages if the war with Iran lasts longer.

This war began on February 28 with the American-Israeli attack on Iran. In response, Tehran blocked the Strait of Hormuz, which is a key transport route for energy resources from the Persian Gulf.

Under normal conditions, 20% of the water flows through it. oil and liquefied natural gas consumed in the world. The suspension of traffic through Hormuz resulted in an increase in gas and oil prices on world markets and disruptions in fertilizer supplies.

A ceasefire in the conflict has been in place since April 8, but Hormuz remains largely blocked. (PAP)

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