World Bank says energy prices could jump 24% in 2026 if Middle East disruptions ease
World Bank warns energy prices could surge 24% in 2026 to their highest since 2022 if Middle East disruptions ease, raising inflation and market risks.
The World Bank on Tuesday, April 28, 2026, warned that global energy prices could climb by 24 percent in 2026 if the most severe disruptions stemming from the Middle East war subside by May 2026. The institution said that outcome would push energy prices to levels not seen since the price shocks that followed the Russian invasion of Ukraine in February 2022. The forecast makes energy prices a central risk for inflation, trade balances and market volatility in the months ahead.
World Bank projection and its conditional scenario
The World Bank’s projection frames the 24 percent increase as conditional rather than certain, hinging on a rapid easing of supply and transit disruptions next month. Analysts at the bank modelled the spike under a scenario in which the most disruptive incidents affecting production, shipping and refining activity abate quickly. The bank’s statement underscores that different trajectories for the conflict and for market responses would yield materially different price paths.
Middle East disruptions defined as the trigger
The bank identified disruptions in the Middle East—including threats to maritime routes, production facilities and regional supply chains—as the primary trigger for the projected jump in energy prices. Those disruptions have elevated premium pricing and risk premia across crude, refined fuels and some gas markets. If those pressures are resolved rapidly, the rebound in demand and restoration of flows could amplify prices as markets adjust.
Comparison with the 2022 energy shock
A 24 percent rise in 2026 would return headline energy costs to a level last seen during the shock that followed Russia’s 2022 invasion of Ukraine. That event dislocated supplies, pushed up freight and insurance costs, and triggered policy responses worldwide, including strategic reserve releases and shifts in trade flows. The World Bank’s reference point to 2022 highlights how concentrated geopolitical shocks can reverberate through global energy markets years after their onset.
Implications for inflation and financial markets
A significant uptick in energy prices would feed into headline inflation across advanced and emerging economies, raising costs for households and businesses. Central banks could face renewed challenges in balancing inflation control against growth risks, particularly if higher energy costs are sustained. Equity and bond markets are likely to react to any sharp repricing of energy-related risk, with commodity-linked assets and currencies of exporters and importers moving in opposite directions.
Potential effects on the UAE and Gulf economies
For Gulf oil and gas exporters such as the United Arab Emirates, higher energy prices would likely bolster fiscal revenues and external balances, supporting public spending plans and reserves. At the same time, the UAE and regional economies could face pressures on transport and industrial costs that affect inflation and consumer prices. Policymakers in the region typically monitor such swings closely to calibrate subsidy policies, fiscal buffers and domestic price management.
Corporate and policy responses expected
Governments and companies are expected to use a mix of tools to mitigate risks, including tapping strategic petroleum reserves, adjusting export plans and increasing hedging activity. Oil-producing nations and producers in OPEC+ may consider coordinating supply responses to stabilize markets, though such decisions will reflect political as well as commercial calculations. Energy firms may accelerate risk management measures, shift shipping routes, or defer investment depending on the persistence and nature of disruptions.
The World Bank’s conditional forecast serves as a reminder that geopolitical developments remain a dominant force shaping energy prices and broader macroeconomic outcomes. Market participants and policymakers will be watching developments in the Middle East closely over the coming weeks to assess whether the forecasted trajectory materializes or whether alternative scenarios — including prolonged disruptions or a rapid demand slowdown — take hold.
