Deutsch
English
Español
Français
Nederlands
Português
The Middle East conflict and disruptions through the Strait of Hormuz have triggered the largest oil supply shock on record, with Brent crude projected to average $86 per barrel in 2026 — up from $69 in 2025 — and energy prices forecast to surge 24% year-on-year, according to the World Bank's April 2026 Commodity Markets Outlook. World merchandise trade growth is expected to halve from 4.7% to between 1.5% and 2.5%, while fertilizer prices are projected to jump 31%, threatening food security for tens of millions. Developing economies are bearing the heaviest burden with inflation rising to 5.1% and growth slowing to 3.6%, exposing the structural vulnerability of an energy system still heavily dependent on fossil fuels and chokepoint-dependent supply chains.
Context: The Strait of Hormuz Crisis
The Strait of Hormuz — a narrow waterway between the Persian Gulf and the Gulf of Oman — is one of the world's most strategically important chokepoints. Before 2026, approximately 25% of global seaborne oil trade and 20% of liquefied natural gas (LNG) passed through the strait annually. The Strait of Hormuz crisis erupted in late February 2026 when escalating conflict between Iran and a US-led coalition led to near-total disruption of shipping through the waterway. By March, global oil supply had crashed by 10.1 million barrels per day (mb/d) — the largest monthly disruption in history — as tankers were unable to transit safely. The Dubai index suspended nominations of crude grades requiring transit through the strait on 2 March 2026, and Brent crude prices surged about 65% ($46/bbl) in a single month, the highest monthly rise ever recorded.
World Bank and UNCTAD Findings: A Dual Shock
The World Bank and the United Nations Conference on Trade and Development (UNCTAD) both issued major reports in April–May 2026 quantifying the economic fallout. The World Bank's Commodity Markets Outlook (April 28, 2026) projects that energy prices will rise 24% in 2026 — the biggest surge since Russia's invasion of Ukraine in 2022 — with overall commodity prices up 16%. UNCTAD's Trade and Development Foresights 2026 warns that world merchandise trade growth will halve from 4.7% in 2025 to between 1.5% and 2.5% in 2026, as shipping disruptions and higher costs choke global commerce.
Oil Markets: The Largest Supply Shock on Record
Brent crude is forecast to average $86/bbl in 2026, up from $69 in 2025. The supply disruption — roughly 10 mb/d — is equivalent to about 10% of global oil production. Despite emergency releases from strategic petroleum reserves, the market faces a 3.7 mb/d deficit in the second quarter of 2026. Oil demand destruction is already emerging, with consumption falling 0.8 mb/d in March and forecast to drop further. In a severe escalation scenario, the World Bank warns Brent could reach $95–$115/bbl. The global oil supply shock has forced central banks worldwide into a stagflation defense, balancing higher inflation against slowing growth.
Fertilizer and Food Security: A Looming Crisis
Fertilizer prices are projected to increase 31% in 2026, driven by a 60% jump in urea prices as ammonia exports from the Middle East are disrupted. The Strait of Hormuz is a critical route for ammonia and other fertilizer inputs. The European Commission's Knowledge for Policy platform warns that fertilizer shortages and higher energy prices threaten crop yields worldwide, while remittance losses and potential shifts to biofuel production could amplify food price volatility, especially in Africa and Asia. The World Food Programme estimates that up to 45 million more people could face acute food insecurity as a result. The fertilizer crisis and food security nexus is particularly acute for import-dependent developing nations.
Impact on Developing Economies
Developing economies are bearing the heaviest burden of the energy shock. The World Bank projects inflation in these economies will average 5.1% in 2026 — one percentage point higher than pre-war forecasts — while GDP growth has been revised downward to 3.6% from a pre-war estimate of 4.0%. Currency depreciation, rising import costs, and financial instability are compounding the crisis. The IMF's April 2026 World Economic Outlook, titled "Global Economy in the Shadow of War," notes that emerging market and developing economies face particularly pronounced slowdowns and inflationary pressures. The World Bank warns that the war is "development in reverse," with the poorest populations hit hardest, and cautions against broad, untargeted fiscal measures that could worsen debt burdens.
Broader Commodity and Trade Implications
Beyond oil and fertilizers, base metals including aluminum, copper, and tin are expected to reach all-time highs in 2026, driven by supply chain disruptions and increased demand for defense and infrastructure rebuilding. Global headline inflation is expected to rise modestly in 2026 before declining in 2027, according to the IMF, but downside risks dominate. UNCTAD warns that while AI-driven trade remained strong early in 2026, momentum is slowing as the energy shock ripples through global supply chains. The global trade slowdown 2026 is expected to be most severe in energy-importing regions, with developing Asia and Africa particularly exposed.
Expert Perspectives
The World Bank's chief economist stated: 'This is the largest energy supply shock in history, and it is hitting the global economy at a time of already elevated inflation and debt. The poorest people are paying the highest price.' UNCTAD Secretary-General Rebeca Grynspan emphasized: 'The crisis exposes the structural vulnerability of an energy system still heavily dependent on fossil fuels and chokepoint-dependent supply chains. Accelerated investment in renewable energy and critical technologies is no longer a choice but an imperative.'
FAQ
What caused the 2026 energy shock?
The energy shock was triggered by the Middle East conflict and near-total disruption of shipping through the Strait of Hormuz, a chokepoint for 25% of global seaborne oil and 20% of LNG.
How high will oil prices go in 2026?
The World Bank projects Brent crude will average $86 per barrel in 2026, up from $69 in 2025. In a severe escalation scenario, prices could reach $95–$115 per barrel.
How will this affect food prices?
Fertilizer prices are projected to rise 31% in 2026, threatening crop yields and food security. Up to 45 million more people could face acute food insecurity, particularly in Africa and Asia.
Which economies are hit hardest?
Developing economies face the heaviest burden, with inflation projected at 5.1% and growth slowing to 3.6%. Energy-importing nations in Africa, Asia, and Latin America are most vulnerable.
What is the outlook for global trade?
World merchandise trade growth is expected to halve from 4.7% in 2025 to between 1.5% and 2.5% in 2026, according to UNCTAD, as shipping disruptions and higher costs choke global commerce.
Conclusion and Future Outlook
The 2026 energy shock represents the most consequential energy and trade story of the year, with direct implications for global stability, food security, and the energy transition. The World Bank and UNCTAD both call for accelerated investment in renewable energy, diversification of trade routes, and targeted support for vulnerable populations. The future of the energy transition may be accelerated by this crisis, as nations seek to reduce dependence on fossil fuel chokepoints. However, in the near term, the global economy faces a period of stagflationary pressure, with the poorest nations bearing the heaviest cost. As the IMF notes, the macroeconomic consequences of wars exceed those of financial crises or natural disasters — and the 2026 Middle East conflict is proving no exception.
Follow Discussion