Energy costs this year to hit highest since Ukraine invasion: World Bank

WASHINGTON: The World Bank said Tuesday that war in the Middle East is expected to push energy costs this year to their highest since Russia’s full-scale invasion of Ukraine, while fertilizer affordability also plunges.

“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation,” said World Bank chief economist Indermit Gill, as the organization releases its latest commodity markets outlook.

Energy costs have rocketed after US-Israeli strikes targeting Iran from February 28. Tehran retaliated by virtually blocking the Strait of Hormuz, a key waterway through which a fifth of global oil and liquefied natural gas normally transits. Its near-total closure has hit global supplies of other important commodities, including fertilizers.

Energy costs are projected to make a 24-percent surge this year, hitting their highest level since Russia’s 2022 invasion of Ukraine, the World Bank said Tuesday.

Meanwhile, fertilizer costs are set to jump by 31 percent this year due to a 60-percent surge in urea prices — dragging fertilizer affordability to its worst since 2022 as well.

This bites into farmers’ incomes and threatens crop yields, the World Bank said.

Commodity costs overall are expected to spike by 16 percent in 2026, driven by fallout from the war and metals prices.