World Bank report reveals how oil prices and food supplies are shifting in a changing world
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A World Bank report shows how markets worldwide, from energy to food, are being hit by the early effects of El Niño and conflicts.
In an adverse scenario, the report finds that oil prices would surge to $105 per barrel in 2027, and food prices would exceed their 2022 level – developments that would drive global inflation higher and worsen food insecurity.
Global energy prices are already expected to rise by 32 per cent in 2026.
Attacks on vessels have continued in the Strait of Hormuz despite rising shipping traffic, with the report warning that a ‘major, sustained re-escalation of hostilities’ in the Middle East could reduce crude oil flows and squeeze global supplies of refined oil products and LNG.
However, prices would decline rapidly if a ‘durable settlement of the conflict in the Middle East’ occurred.
Prices of maize and wheat supplies from Russia and Ukraine, which collectively account for around 30 per cent of global wheat exports, may also rise if strikes targeting grain shipments in the Black Sea continue. Already, Ukraine’s wheat exports in August 2026 were nearly 70 per cent lower than a year earlier.
Beverage prices are forecast to retreat by 24 per cent year-on-year in 2026, as both coffee and cocoa production recover from disease and weather-related declines.
Rice production in Southeast Asia is expected to decline for the first time in ten years because a strong El Niño, expected to be the strongest since 1950, is damaging harvests. El Niño-related weather is also expected to curb palm oil production in the region.
In the US, wheat production is expected to fall by 23 per cent, to a 55-year low, due to drought, extreme heat, and a continued long-term decline in planted acreage as growers switch to more profitable crops.
Elsewhere in the EU, wheat production is also forecast to drop by eight per cent amid sustained hot, dry conditions.
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However, despite ‘substantial challenges’ for some commodities, the report finds that the overall impact of El Niño on food prices is expected to be ‘manageable and consistent with historical experience’.
If conflict intensifies and weather-related losses exceed expectations, food and grain prices could be 12 per cent and 20 per cent above the 2027 baseline, respectively.
Efforts to slow food insecurity have regressed since the 2010s, with severe food insecurity affecting 9.5 per cent of the global population in 2025, compared with an average of 8.1 per cent in 2015-2019.
