- The World Bank has forecast a 24% rise in global energy prices in 2026, with the possibility that oil could reach $115/bbl in a prolonged disruption scenario.
- The outlook has been driven by escalating Middle East conflict and supply risks.
- Renewed inflationary pressure on global economies is a likely outcome.
The World Bank has warned that global energy prices could surge by as much as 24% in 2026, as geopolitical tensions in the Middle East disrupt supply and unsettle markets.
According to the World Bank, Brent crude could rise to around $115 per barrel if current conditions persist, with gas and coal markets also expected to tighten.
The warning marks one of the clearest official acknowledgements yet that the current geopolitical crisis is not a short-term shock, but a structural risk to global energy stability. Disruption in key transit routes, including the Strait of Hormuz, has heightened concerns over supply security and market volatility.
For policymakers, the implications are immediate. Higher energy prices feed directly into inflation, raising costs for households and industry while complicating monetary policy decisions. For governments already grappling with cost-of-living pressures, the prospect of sustained energy inflation presents a significant political challenge.
The UK is particularly exposed. As a net importer of oil and gas, it remains vulnerable to global price movements despite progress in renewable deployment. A sustained price increase would put upward pressure on energy bills, industrial costs and public finances.
At the same time, the outlook reinforces the economic case for accelerating the energy transition. Higher fossil fuel prices improve the relative competitiveness of renewables, storage and electrification, potentially speeding up investment decisions.
However, this dynamic is not straightforward. While high prices can stimulate clean energy investment, they also strain supply chains, increase project costs and reduce consumer willingness to bear transition-related expenses.
The broader significance of the World Bank’s warning lies in its framing of energy as a macroeconomic risk. The transition is no longer just an environmental or industrial issue – it is central to global economic stability.
For the UK and other advanced economies, the challenge is to balance short-term crisis management with long-term structural change. The current shock may accelerate the transition, but it also exposes the fragility of the existing system.
