World Bank expects food prices to rise 10% this year as the Iran war drives up energy and fertiliser costs

The World Bank's latest Commodity Markets Outlook, published on 28 October, expects energy prices to average 32% more in 2026 than in 2025, fertiliser 14% more and food commodities about 10% more.

==================== SIGNAL BOX: WHY IT MATTERS ==================== Higher fuel and fertiliser costs feed into what people pay for food, transport and everyday goods, and the World Bank expects food prices to keep rising in 2027.

==================== SIGNAL BOX: WHAT'S NEXT ==================== Much depends on shipping through the Strait of Hormuz. In the World Bank's worse case, oil averages $105 a barrel next year and food prices run 12% above its main forecast.

==================== BODY (paste in Markdown mode) ==================== The war with Iran is now showing up in the price of food. In its latest Commodity Markets Outlook, published on 28 October, the World Bank said food commodity prices such as grains and vegetable oils are set to rise by about 10% this year, and by at least another 7% in 2027, Reuters reported.

The main reason is energy. The bank expects energy prices to average 32% more in 2026 than in 2025, their highest level since 2022, and fertiliser prices to rise 14%, The National reported.

"Higher energy costs and trade disruptions are driving up prices across a broad range of commodities," said Ayhan Kose, the World Bank's deputy chief economist.

The biggest drop in oil supply in decades

The World Bank expects global oil supply to fall by 5.2% this year, the largest drop since the oil crises of the 1970s, outside the 2020 pandemic recession, according to both reports. It forecasts Brent crude to average just over $90 a barrel in 2026, up from $69 last year, before easing in 2027.

Prices have been far higher on some days. Brent was trading near $115 when the report came out, The National reported.

Why the Strait of Hormuz matters for food

About a quarter of the world's seaborne oil trade and about one-third of seaborne fertiliser trade pass through the Strait of Hormuz, according to a March report by UNCTAD, the UN's trade and development agency. Iran has tightly restricted traffic there since the war began on 28 February, and ships are still being attacked, as we reported this week.

When fuel costs more, so do tractors, trucks and the ships that carry grain. When fertiliser costs more, farmers either pay more or use less, which can cut harvests. Both push food prices up, usually months later.

Who is most exposed

Countries that import much of their fuel and fertiliser from the Gulf feel this first. Pakistan bought 27% of its seaborne fertiliser imports from the Persian Gulf in 2024, UNCTAD said, and depends on imported oil for much of its petrol and diesel. We looked at what that means for Pakistani households in our explainer on fuel and food prices.

The World Bank has so far given $8.7 billion to 25 countries affected by the war and said it could scale that up sharply if the fallout lasts, according to The National.

What to watch

The outlook depends on shipping through Hormuz. In the World Bank's worse scenario, Brent averages $105 a barrel in 2027 and food prices run 12% above its main forecast. Talks between Washington and Tehran, and whether attacks on ships stop, will decide which way it goes.