The US-Israel war on Iran has driven global commodity prices up an average of 16% in 2026, with energy costs projected to rise 24%, fertilizer prices 31%, and key industrial metals approaching record highs, as Strait of Hormuz shipping disruptions show no sign of resolution. For Mexico, the shock compounds pressure across fuel-dependent sectors including agriculture, manufacturing, logistics and construction. Prolonged disruption risks accelerating inflation, squeezing agricultural margins and straining public finances at a moment of elevated fiscal sensitivity.
Global commodity prices have risen an average of 16% this year as the US-Israel war on Iran enters its ninth week with no resolution in sight, driving oil above US$112/b, pushing fertilizer costs to their highest level since 2022, and rattling metal markets. The World Bank warned that energy prices alone could rise 24% in 2026, their highest level since Russia’s invasion of Ukraine, as shipping disruptions in and around the Strait of Hormuz.
Oil Markets Take a Hit
The World Bank’s baseline forecast, published in its latest Commodity Markets Outlook, projects Brent averaging US$86/b in 2026, assuming most war-related disruptions ease by next month and Hormuz traffic gradually returns to pre-war levels by year-end. A more adverse scenario, involving heavier damage to production infrastructure, puts the average at US$115/bl. Brent Crude topped US$112/b on April 28, up 3.79% on the day, while the US benchmark West Texas Intermediate surged nearly 5% to US$101.10. Before the war, Brent traded near US$70.
Qatar has warned of the possibility of a “frozen conflict” in the Gulf. The UAE announced it is exiting OPEC and OPEC+ on May 1, citing the need for greater flexibility to increase production and meet what it described as “the urgent needs of the market.”The aerospace sector is bracing for a raise in jet fuel costs. Sweden’s government warned of a potential jet fuel shortage, noting that 20% of EU jet fuel normally transits the Strait of Hormuz. “Even if a lasting peace deal were to be in place tomorrow, it would likely still take time before oil and gas supplies are restored,” said Swedish Energy Minister Ebba Busch.
Fertilizers, Food and Metals
The commodity pressure is affecting other industries. The World Bank projects fertilizer prices, derived from hydrocarbons, will rise 31% this year, a level not seen since 2022, “reducing farm incomes and threatening future crop yields.” In March, the World Food Program estimated that if the conflict does not end soon, rising fertilizer and food costs could push up to 45 million more people into acute food insecurity in 2026.
“The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive,” said Indermit Gill, Chief Economist, World Bank Group. “The poorest people, who spend the highest share of their income on food and fuels, will be hit the hardest, as will developing economies already struggling under heavy debt burdens. All of this is a reminder of a stark truth: war is development in reverse.”
Metal markets are also under pressure. Nickel futures on the London Metal Exchange rose as much as 2.8% on April 27 before giving back most gains, touching their highest level since June 2024 at US$19,155/t. The war has driven a surge in sulfur prices, a key reagent in nickel processing, and raised concerns about supply disruptions, including mixed-hydroxide precipitate production in Indonesia, which accounts for more than half of global nickel output. Copper and aluminum, in strong demand from data centers, EVs and renewable energy sectors, are also approaching record levels, according to the World Bank report.
Iran, meanwhile, banned the export of steel products effective April 26. Israel said airstrikes before the April 8 ceasefire destroyed 70% of Iran’s steel production capacity. Iran’s economy, already carrying inflation near 50% before the war, has seen sharp rises in the prices of basic necessities, with some goods in short supply, according to Iranians who have spoken with CBS News.
War at a Glance
The conflict began Feb. 28, when United States and Israeli forces launched joint strikes on Iran, killing Supreme Leader Ali Khamenei. Iranian-backed Hezbollah entered the war on March 2, firing rockets at Israel from Lebanon. A ceasefire on the Lebanese front brokered by the Trump administration has held in name, though both sides continue exchanging fire. Iran reimposed a full blockade on Strait of Hormuz shipping on April 21, after a brief period during which some vessels transited the waterway under what Iranian media described as coordination with Tehran.
As of April 28, diplomatic efforts remained at an impasse. Iran proposed a mutual lifting of shipping restrictions and a delay on nuclear talks; the White House declined to fully embrace the offer. White House press secretary Karoline Leavitt said President Trump’s “red lines with respect to Iran have been made very, very clear,” without elaborating. Secretary of State Marco Rubio called Iran’s offer “better than what we thought they were going to submit,” but said the nuclear question remained “the core issue.”
“There is no doubt in my mind that at some point in the future if this radical clerical regime remains in charge in Iran, they will decide they want a nuclear weapon,” Rubio said. “That fundamental issue still has to be confronted.”
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