World Bank predicts international commodity prices to hit 5-year low in 2025

Date

10/30/2024 5:37:37 AM

(MENAFN) The World Bank’s recent Commodity Markets Outlook report for October 2024 projects that global commodity prices will hit their lowest levels in five years by 2025, continuing to decline into the following year due to an anticipated oil surplus. This surplus is expected to be significant enough to mitigate the price impacts of potential escalations in conflict within the Middle East, although overall commodity prices are expected to remain approximately 30 percent higher than those recorded during the COVID-19 pandemic.

Specifically, oil prices are forecasted to decrease by 5.1 percent in 2025 and by 1.7 percent in 2026, following a decline of 3.4 percent in 2024. While the overall trend is downward, increases in natural gas prices and a stable outlook for metals and agricultural raw materials are likely to temper declines across various commodity sectors. The global oil supply is projected to surpass demand by an average of 1.2 million barrels per day next year, a situation reminiscent of the oversupply seen during the pandemic in 2020 and during the oil price collapse in 1998.

Brent crude oil prices are expected to average USD80 per barrel in 2024, with forecasts indicating a drop to USD73 in 2025 and further down to USD72 in 2026. Meanwhile, global food prices are anticipated to stabilize after experiencing an 8.5 percent decrease this year and a 4 percent decline next year, though prices are expected to remain about 25 percent above the average levels seen from 2015 to 2019.

Additionally, energy prices are projected to fall by 5.8 percent in 2024 and by 6.2 percent in 2025, with a further 2.1 percent drop anticipated in 2026. This decline in food and energy prices is likely to provide relief for central banks in their ongoing battle to control inflation. However, the report cautions that the potential for escalating conflicts in the Middle East poses significant upside risks to energy prices in the near term, which could disrupt energy supplies and have ripple effects on other commodity prices.

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