The World Bank forecasts a 23% surge in overall commodity prices by 2026—what impacts will this bring?

Inflation—the most significant impact, without question, is inflation. Moreover, given that inflation has already begun rising markedly across major advanced economies, the margin for market adjustment has shrunk dramatically—even to the point where some economies have virtually no buffer left, placing them at direct risk of a hard landing. (Indeed, signs of such a hard landing are already emerging across society in these advanced economies.) And this round of inflation is not driven solely by surging oil prices; prices of key metals are also climbing. In fact, energy and metal price increases are interrelated. Metals certainly have their own independent demand drivers—for instance, AI computing infrastructure and new-energy construction are boosting demand for copper, aluminum, tin, and other metals. Yet we must also recognize that metal production itself is highly energy-intensive: nonferrous smelting—especially aluminum—is notoriously power-hungry, while logistics rely heavily on diesel, causing transport costs to surge sharply. These compounding pressures are pushing metal prices to record highs. Such steep inflation typically heralds an impending recession, because the standard policy response—raising interest rates—is virtually the only tool available. Yet rate hikes inevitably trigger massive job losses in the real economy. When layered atop the accelerating trend of AI-driven job displacement, a pronounced recession appears increasingly inevitable. (At this stage, it’s no longer tenable to claim AI-driven job displacement is impossible—even domestically, relevant authorities have issued formal notices and convened special meetings; judging from their wording, large-scale displacement is no longer in doubt—it’s now about preventing systemic, economy-wide displacement.) Furthermore, haven’t we recently heard far less talk about “promoting a reasonable rebound in price levels”? That’s because overall household consumption remains weak, and neither government nor corporate investment has yet picked up sufficiently to drive upstream-to-downstream price transmission. Yet we must understand: price transmission *will* eventually occur. Weak demand can only delay—not prevent—it. And the slower the transmission, the greater the risk: it implies firms are raising prices only after profits have been squeezed to near zero and after exhausting conventional coping measures like output cuts and layoffs. From a macroeconomic perspective, this scenario risks triggering a sharp, discontinuous jump in the CPI. Thus, sluggish transmission from PPI to CPI cannot be simplistically viewed as a buffer against imported inflation. If imported inflation persists long enough for eventual transmission, accumulated risks may instead erupt all at once.

The World Bank’s latest warning states this crisis runs far deeper than previously anticipated—from energy to survival, from oil to food.

The global economy has once again been schooled by a narrow strait. The Strait of Hormuz does not produce prosperity—but it delivers global economic prosperity. In April, the World Bank released its *Commodity Markets Outlook*, forecasting that the oil crisis triggered by the U.S.-Iran conflict represents the largest petroleum supply shock since the dawn of the oil industry. Global oil supply plummeted by 10 million barrels per day in March, sending Brent crude prices soaring from $72/barrel at end-February to $118/barrel at end-March. The crux of this crisis extends far beyond fuel oil. The true danger lies in how the oil shock has permeated—via natural gas, naphtha, LPG, sulfur, urea, methanol, and skyrocketing transportation costs—into global chemical, agricultural, manufacturing, and food systems. The Strait of Hormuz matters not merely because it is narrow, but because the world’s energy and chemical industries—and indeed, global manufacturing—are overwhelmingly dependent on it. Prior to the conflict, vessels transiting the Strait carried 35% of global seaborne crude oil, 20% of refined petroleum products, and 20% of global liquefied gas trade. According to the World Bank, global commodity prices will rise 16% by 2026, with energy prices surging 24%—the most severe energy-price shock since the Russia-Ukraine war in 2022. Oil is the first domino. The World Bank projects Brent crude’s 2026 average price at $86/barrel—a marked increase over $69/barrel in 2025. Should the conflict persist longer or critical infrastructure suffer more extensive damage, the average oil price could climb to $95–$115/barrel. The International Energy Agency (IEA) noted in its April oil market report that global oil supply dropped by 10.1 million barrels per day in March, with demand reductions concentrated in the Middle East and Asia-Pacific—particularly for naphtha, LPG, and aviation fuel. In other words, this oil shock has shifted petroleum from being merely expensive to becoming genuinely scarce. For the chemical industry, this oil crisis is especially critical. Naphtha, ethane, and LPG are not ordinary fuels—they serve as essential feedstocks for ethylene, propylene, plastics, resins, packaging materials, and synthetic fibers. When Asian petrochemical producers, facing acute feedstock shortages, are forced to cut operating rates—or even halt production entirely—the shock transcends the energy sector and directly inflates production costs across the entire manufacturing chain. Experts from the World Economic Forum analyze that the Hormuz crisis is disrupting markets for non-oil commodities including methanol, sulfur, aluminum, helium, ethylene glycol, and graphite feedstocks. Roughly one-third of global seaborne methanol trade passes through the Strait; ethylene glycol is a vital raw material for polyester fiber, packaging, and textiles. Natural gas pricing, too, faces fundamental redefinition. World Bank data shows LNG prices surged 94% in Asia and 59% in Europe during March. The IEA’s Q2 natural gas report notes that closure of the Strait directly eliminated nearly 20% of global LNG supply; damage to Middle Eastern liquefaction facilities could further delay new LNG capacity additions over the next five years. Europe is not the Gulf’s largest LNG buyer—but it must now compete with Asian nations for alternative supplies. The Americas face the smallest natural gas impact, primarily due to their heavy reliance on domestic pipeline networks. Conventional coal energy has become an unseemly winner.

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

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