World Bank forecasts record increase in commodity prices due to war in Iran

The World Bank forecasts that this year the prices of raw materials around the world will reach their maximum since 2022 – the consequences of the war in Iran will be more severe than the invasion of Russia in Ukraine. This is reported by Bloomberg.

According to the latest forecast on commodity markets, published by the World Bank, the index of prices of raw materials will increase by about 16% this year.

“War hits the global economy in waves: first through rising energy prices, then through rising food prices and, finally, through general inflation,” says Indermit Gill, chief economist at the World Bank.

According to forecasts of the World Bank, this year prices of raw materials will increase by about 24%, while the baseline forecast assumes that the “most acute” disruptions in supplies will end in May. Meanwhile, the average price of Brent crude oil this year will be $86 per barrel, an upward revision from the January estimate of $60 per barrel.

The bank also forecasts a 31% annual increase in fertilizer prices.

Fertilizers are produced from natural gas and petroleum products, so their price directly depends on the cost of energy. Ultimately, this may lead to higher food prices and increased food insecurity.

It should be noted that energy and fertilizer prices have soared to multi-year highs since the start of the Iran war. The virtual closure of the Strait of Hormuz, through which about a third of the world’s seaborne oil trade passed before the conflict, has caused a historic shock to energy and commodity markets.