Global energy markets face a significant upward revision in price forecasts, with the World Bank projecting Brent crude oil prices to average $94 per barrel in 2026. This represents a substantial 36 percent increase over 2025 figures and a more than 50 percent, or $34, rise above the institution’s January outlook. The primary drivers behind this elevated projection are the ongoing conflict in the Middle East and the anticipated disruptions to shipping through the critical Strait of Hormuz, according to a new report from the World Bank.
Brent Crude’s Elevated Trajectory
The World Bank’s latest Global Economic Prospects Report, released on Thursday, underscores the profound impact of geopolitical tensions on global commodity markets. The report specifically highlights that the persisting conflict in the Middle East and the potential closure or severe disruption of the Strait of Hormuz are expected to keep global energy prices significantly elevated. The forecast of Brent crude reaching an average of $94/barrel in 2026 marks a sharp departure from earlier expectations, reflecting a heightened risk premium associated with supply vulnerabilities in the region.
This revised outlook for Brent crude is not merely an incremental adjustment. The 36 percent increase over 2025’s anticipated prices, coupled with the more than 50 percent (or $34) jump from the January outlook, illustrates a dramatic shift in market sentiment and risk assessment by the global lender. Disruptions to the flows of energy products and other commodity supplies originating from the Middle East region have already contributed to a sharp upward movement in commodity prices across the board.
Broader Commodity Market Revisions
The impact of these geopolitical factors extends beyond crude oil, influencing the broader commodity complex. The World Bank’s report indicates that overall commodity prices are now anticipated to rise by 22 percent this year. This figure stands in stark contrast to the 7 percent decline that was expected in January, signaling a complete reversal of earlier projections for the commodity sector. The lender attributes this significant turnaround to the ongoing disruptions affecting supply chains and the heightened uncertainty stemming from the Middle East.
The Strait of Hormuz: A Critical Assumption
A key assumption underpinning the World Bank’s revised forecasts is the continued disruption of shipping through the Strait of Hormuz. The report explicitly states a baseline assumption that ‘shipping through the Strait of Hormuz remains severely disrupted through July, with shipping volumes haltingly resuming thereafter, and approaching pre-conflict levels by the end of the year.’ This critical waterway, through which a significant portion of the world’s oil supply passes, is central to the elevated price outlook. The World Bank cautions that ‘the outlook remains highly sensitive to the duration and intensity of these disruptions,’ emphasizing the precarious nature of the current market environment.
Natural Gas Markets Diverge
While crude oil prices are set for a substantial increase, the natural gas market presents a more nuanced picture for 2026. The World Bank projects that natural gas prices in Europe are anticipated to rise by approximately 30 percent. This significant increase is primarily attributed to reduced global supply of liquefied natural gas (LNG), which disproportionately affects European markets reliant on imports. In contrast, the United States is expected to see a much more modest increase of only 2 percent in natural gas prices, reflecting its robust domestic production and less reliance on global LNG supplies.
The World Bank’s latest report serves as a stark warning to global economies and policymakers regarding the persistent inflationary pressures emanating from energy markets. The confluence of geopolitical instability in the Middle East and the vulnerability of critical shipping lanes like the Strait of Hormuz are poised to keep energy costs elevated, with significant implications for global economic growth and stability. The sensitivity of these projections to ongoing events underscores the need for continuous monitoring and adaptive strategies in the face of an unpredictable global energy landscape.
