- Energy costs likely to rise by up to 24%: BM.
- The war seriously affected global economies: economist.
- The World Bank says the cost of the metal is expected to hit all-time highs.
The World Bank said Tuesday that the war in the Middle East is expected to raise energy costs this year to their highest level since Russia’s large-scale invasion of Ukraine, while fertilizer affordability also plummets.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally higher inflation,” said World Bank chief economist Indermit Gill, as the organization releases its latest outlook for commodity markets.
Energy costs have skyrocketed following the US and Israeli attacks on Iran on February 28. Tehran retaliated by virtually blocking the Strait of Hormuz, a key waterway through which a fifth of the world’s oil and liquefied natural gas normally transit.
Its near-total shutdown has affected the global supply of other important commodities, including fertilizers.
Energy costs are projected to rise 24% this year, reaching their highest level since Russia’s invasion of Ukraine in 2022, the World Bank said on Tuesday.
Meanwhile, fertilizer costs are expected to rise 31% this year due to a 60% rise in urea prices, also dragging fertilizer affordability to its worst level since 2022.
This affects farmers’ incomes and threatens crop yields, the World Bank said.
Overall raw material costs are expected to rise 16% in 2026, driven by the fallout from war and metal prices.
The cost of base metals such as aluminum, copper and tin is expected to hit record highs due to demand from industries such as data centers and electric vehicles, the bank said.
Oil prices have surpassed recent peaks, but still remain significantly higher than before the Middle East war.
Brent oil prices are around 50% above pre-war costs, while the US West Texas Intermediate benchmark is also more than 40% higher.
Even if the most severe disruptions end in May and shipping through the Strait of Hormuz recovers by the end of 2026, Brent oil is forecast to average $86 a barrel this year, up from $69 a barrel in 2025, the World Bank said.
Higher inflation is likely to push up interest rates, making debt more expensive, Gill added in a statement.
“The poorest people, who spend most of their income on food and fuel, will be hardest hit, as will developing economies already struggling with heavy debt burdens,” he said.
