The report noted that commodity markets have witnessed a sharp surge since the outbreak of the conflict involving the US, Israel and Iran in late February 2026, with the impact spreading across energy, metals, fertilizers, food commodities and raw materials.
“Going forward, we believe that prices may remain elevated even in the next few months as it will take some time for supply chains to completely normalise even after the war ends,” the report said.
The World Bank’s headline commodity price index rose by 30.7 per cent between February and May 2026, reversing a 10.9 per cent decline recorded during the same period last year. The increase was largely driven by a sharp rise in crude oil prices following disruptions in the Strait of Hormuz, a critical global shipping route.
Energy prices emerged as the biggest contributor to the rally, with the energy index rising 44.9 per cent during the period. Average crude oil prices surged by 47.7 per cent, while natural gas prices rose by 33.2 per cent. Coal prices also increased by 10.9 per cent as higher fuel costs pushed up transportation expenses.
Beyond energy, the report highlighted a broad-based rise in non-energy commodities. Fertilizer prices jumped 37.8 per cent, led by a 63.2 per cent increase in urea prices amid natural gas shortages and shipping disruptions. Metal and mineral prices rose 9.7 per cent, driven by supply concerns and growing demand from infrastructure and clean energy sectors.
The report said aluminium prices climbed 19.6 per cent due to production disruptions in the Gulf region, while tin prices remained elevated because of export restrictions and strong demand from the artificial intelligence industry.Agricultural commodities also witnessed upward pressure. The agriculture index increased by 5.7 per cent, supported by higher prices of edible oils and grains. Soybean oil prices surged 38.5 per cent, while wheat prices rose 14.8 per cent.
“Adverse weather conditions, elevated input costs (diesel, fertilizers) are adding to pressure on prices of grains,” the report observed.
The report also pointed to growing demand for renewable fuels as a factor behind higher prices of soybean oil and corn, which are used in biodiesel and ethanol production, respectively.
Among beverages, tea prices rose 11.7 per cent due to robust global demand and shipment disruptions, while cocoa prices gained 15.9 per cent amid adverse weather conditions in major producing regions of West Africa.
Raw materials such as cotton and rubber also registered significant gains of 24.5 per cent and 16.9 per cent, respectively. BoB attributed the rise to weather-related supply shortages and increased production costs for synthetic alternatives.
Looking ahead, the report warned that commodity markets are likely to remain volatile as geopolitical uncertainty persists and climate risks intensify.
“Even after the war has ended, it will still take some time for supply chains to normalise and freight cost (including cost of insurance) to come down,” it said.
The report added that a strong El Nino event expected this year could further affect agricultural production globally, keeping commodity prices under pressure. As a result, BoB expects India’s Wholesale Price Index (WPI) inflation to average around 7-8 per cent in FY27, with elevated global commodity prices gradually feeding into retail inflation.