Middle East Conflict Triggers Global Energy Shock, World Bank Warns
WASHINGTON (AP) - The ongoing conflict in the Middle East has caused the largest global oil supply shock on record, driving energy prices to surge by 24% in 2026 and threatening to push the world into a new era of inflation and economic instability, the World Bank warned Tuesday in its latest Commodity Markets Outlook report.
The war has severely disrupted oil shipments through the Strait of Hormuz, a narrow waterway that carries about 35% of the world's seaborne crude oil. Attacks on energy infrastructure and commercial vessels have removed an estimated 10 million barrels per day from global supply - roughly 10% of total world output.
" This is a crisis without precedent in modern energy markets," said Ayhan Kose, the World Bank's Chief Economist. "The ripple effects will be felt across every continent, hitting developing countries the hardest as they face soaring import bills and rising poverty."
Brent crude oil, the global benchmark, is projected to average "$86 a barrel" in 2026 - up from $69 in 2025 - and could spike above $100 if hostilities escalate further. Natural gas prices in Europe and Asia have also jumped by more than 40%, while fertilizer costs are expected to rise by 31%, risking global food security.
The World Bank emphasized that the current situation is far more severe than the 2022 Ukraine war energy shock, due to the Strait of Hormuz's outsized role in global trade and the limited ability of other producers to offset losses.
" There is no quick fix," Kose said. "The world must prepare for prolonged volatility, with higher energy costs likely to persist through 2027."
The report comes as global leaders struggle to contain the conflict, which has drawn in multiple regional powers and raised fears of a wider war. The United Nations has called for an immediate ceasefire, while major oil consumers - including China, India, and European nations - have urged OPEC+ to increase production to stabilize markets.
For developing nations, the energy surge poses a double blow: higher fuel prices drive inflation, while currency depreciation makes imports even more expensive. The World Bank estimates that an additional 10 million people could fall into extreme poverty this year due to rising energy and food costs.
" This is not just an energy crisis - it's a development crisis," said Kose. "The international community must act now to support vulnerable countries, including through financial aid, debt relief, and targeted subsidies for low-income households."
The World Bank's warning follows a series of dire forecasts from other international organizations, including the International Monetary Fund, which last week cut its 2026 global growth outlook to 2.8%, citing the Middle East conflict and energy market disruptions as key risks.
