According to the World Bank’s latest report, Commodity Markets Outlook, global commodity prices are expected to decline significantly by 2026, reaching their lowest level in five years. This decline is largely attributed to a historic oil supply glut, which could limit the impact of geopolitical tensions, particularly in the event of broader conflict in the Middle East.
For the year 2025, the World Bank predicts that global oil supply will exceed demand by 1.2 million barrels per day. This figure is remarkable, because it was only exceeded during the confinements linked to the Covid-19 pandemic and the collapse of prices in 1998. This surplus supply is partly explained by a stagnation in demand in China, observed since 2023, as well as by an increase in production in various countries outside the Organization of the Petroleum Exporting Countries (OPEC) and its allies. OPEC+ also maintains significant reserves, estimated at 7 million barrels per day, almost double the level recorded before the pandemic.
Between 2024 and 2026, global commodity prices are expected to decrease by almost 10%. Food prices, in particular, are expected to fall by 9% in 2024, followed by a 4% decline in 2025. However, it is important to note that these prices will remain around 25% higher than average levels observed between 2015 and 2019. Regarding energy, forecasts indicate a decline of 6% in 2025, then 2% in 2026, which could make the fight against inflation easier for central banks.
However, an escalation of conflicts could disrupt these forecasts. Indermit Gill, chief economist of the World Bank, emphasizes that although falling commodity prices can serve as a buffer against geopolitical shocks, it will not be enough to alleviate the difficulties linked to food insecurity, which is already affecting more of 725 million people in developing countries.
The report also highlights the implications of an intensification of conflict in the Middle East. A reduction in global oil supply of 2 million barrels per day could lead to an initial rise in Brent prices, reaching a peak of $92 per barrel. However, producers not affected by the conflict could compensate for this increase by increasing their production.
Finally, the good news for policymakers in developing economies is that the current situation of the global economy is more favorable for dealing with an oil shock than before. Ayhan Kose, deputy chief economist at the World Bank, says lower commodity prices could help meet inflation targets, while providing an opportunity to reduce fossil fuel subsidies.
Meanwhile, the price of gold, traditionally seen as a safe haven, is expected to reach record levels this year, with an increase of 21% compared to 2023, while prices of industrial metals are expected to remain relatively stable until 2026 .
