A new report by the World Bank warns that escalating geopolitical tensions and supply disruptions are driving a renewed surge in global commodity prices, raising risks to inflation and growth, particularly for import-dependent economies such as the Philippines.
In its Commodity Markets Outlook — April 2026, the World Bank said the war in the Middle East has triggered a “historic shock” to commodity markets, disrupting oil supply and pushing prices higher across energy, food, and industrial inputs. The report projects that global commodity prices will rise this year, reversing earlier expectations of easing costs and underscoring the persistence of supply-side pressures.
Energy remains at the center of this shift. The report forecasts a sharp increase in energy prices, driven by supply shortfalls and ongoing uncertainty in key transit routes. Brent crude is expected to average around $86 per barrel this year, with risks of further increases if disruptions persist. As energy costs rise, the effects are transmitted across sectors, raising transport and production costs and feeding into broader inflation.
The impact extends beyond oil. The World Bank said fertilizer prices are expected to surge due to export disruptions and rising production costs, adding pressure to global food systems. Higher input costs are also expected to push up prices of food commodities and metals, reflecting the interconnected nature of commodity markets.
These dynamics are expected to weigh on economic performance. The World Bank warned that rising energy prices could slow growth in emerging market and developing economies while pushing inflation to multi-year highs. Even under baseline assumptions, the outlook suggests that price pressures will remain elevated, with risks skewed toward further increases if geopolitical tensions intensify.
While the report does not single out individual countries, the Philippines stands out as particularly exposed to these developments due to its structural reliance on imports. The country sources more than 90% of its oil requirements from abroad, making domestic fuel prices highly sensitive to global market movements. This dependence means that increases in global oil prices are quickly transmitted to transport costs, electricity rates, and the broader cost of goods.
Recent data already point to rising domestic pressures. Inflation in the Philippines accelerated to 4.1% in March 2026, breaching the central bank’s target range, largely driven by higher fuel costs linked to global price increases. Analysts have warned that sustained oil price increases could further dampen growth, with estimates suggesting that higher energy costs could shave as much as 0.8 percentage point off economic expansion.
The transmission of commodity shocks is not limited to energy. The Philippines also remains vulnerable to movements in global food prices, particularly given its reliance on imported inputs such as fertilizer. Rising global prices can feed into domestic supply chains, while climate-related disruptions—including typhoons and extreme weather—can further constrain local production, amplifying price volatility.
Government responses have so far focused on mitigating immediate impacts. Authorities have implemented measures such as temporary tax suspensions on select fuel products to ease pressure on consumers. However, economists caution that such interventions may offer only short-term relief if global commodity prices remain elevated.
The World Bank’s outlook underscores the broader challenge facing economies like the Philippines. As commodity markets become increasingly influenced by geopolitical conflict, climate risks, and supply chain disruptions, price stability is becoming harder to sustain. The report notes that risks to commodity price projections remain tilted toward higher prices, suggesting that volatility could persist in the near term.
More broadly, the report points to a shift in how global prices are formed. Commodity markets are no longer shaped solely by gradual changes in supply and demand, but increasingly by disruptions that reprice risk across economies.
For the Philippines, this means that exposure to external shocks is likely to remain a defining feature of its economic landscape, reinforcing the need for policies that can absorb volatility rather than assume stability.
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