In its latest Commodity Markets Outlook released Tuesday, the World Bank said that attacks on energy infrastructure and shipping disruptions in the Strait of Hormuz, which handles about 35 percent of global seaborne crude oil trade, have triggered the largest oil supply shock on record, with an initial reduction in global oil supply of about 10 million barrels per day, Xinhua news agency reported.
Fertilizer prices were projected to increase by 31% in 2026, driven by a 60% jump in the price of urea, the most widely used solid nitrogen fertilizer, which is produced by converting natural gas to produce ammonia and carbon dioxide.
The surge in fertilizer prices would fuel pressures on food supply, eroding farmers' incomes and threatening future crop yields. The World Food Programme estimates that 45 million more people could face acute food insecurity this year if the war continues for a prolonged period.
The World Bank said inflation in developing economies was now projected to average 5.1% in 2026, under the baseline scenario, up from 4.7% last year and a full percentage point higher than pre-war forecasts. But inflation could rise as high as 5.8% in developing economies if the war was prolonged.
Growth would also take a big hit, the bank said. Developing economies were now projected to grow by just 3.6% in 2026, down from a pre-war forecast of 4% growth.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” World Bank chief economist Indermit Gill said. The shock would hit the poorest hardest, adding to the woes of highly indebted developing countries.
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