Undermined by heavy supplies of crude oil, world commodity prices are set to fall sharply over the next two years, according to the World Bank’s latest Commodity Markets Outlook.
With weakness in crude oil – the king of all commodities – overhanging the other markets, global commodity prices are projected to plummet by nearly 10% from 2024 through 2026, the World Bank said in the report.
Energy prices are expected to drop by 6% in 2025 and an additional 2% in 2026, while world food prices are projected to fall 9% this year and an additional 4% in 2025 before leveling off. However, that would still leave food prices nearly 25% above the average level from 2015 through 2019.
Even with the expected decline, overall commodity prices are still expected to remain 30% higher than they were in the five years before the COVID-19 pandemic.
Over the past year, conflict in the Middle East has brought significant volatility to oil prices amid worries the oil and gas infrastructure of major commodity producers could be damaged if the conflict were to intensify. Assuming the conflict does not intensify, the report said the annual average price of Brent crude is expected to fall to a four-year low of $73 in 2025, down from $80 a barrel this year.
Even if the conflict were to worsen, the report suggests the price of oil would be kept in check by increases in output from suppliers outside the war zone.
Next year, the global oil supply is expected to exceed demand by an average of 1.2 million barrels per day, a glut that has been exceeded only twice before—during the pandemic-related shutdowns in 2020 and the 1998 oil-price collapse, the report said.
The new oversupply partly reflects a major shift in China, where oil demand has essentially flatlined since 2023 amid a slowdown in industrial production and an increase in sales of electric vehicles and trucks powered by liquefied natural gas (LNG). In addition, several countries that are not part of the Organization of Petroleum Exporting Countries or its allies (OPEC+) are expected to ramp up oil production.
OPEC+ itself maintains significant spare capacity, amounting to 7 million barrels per day, almost double the amount on the eve of the pandemic in 2019, the report said.
